The two companies have agreed to work together with the Korea Automotive Technology Institute and Korea Electronics Technology Institute to strengthen the country’s automotive semiconductor industry. Hyundai Motor is expected to provide automotive components including platforms for microprocessors to be tested.

The South Korean government this week also announced it will offer tax incentives and state subsidies to companies investing in developing semiconductor technologies and new production capacity. It is targeting investments of up to KRW510trn (US$450bn) by 2030 to increase the country’s self-reliance on microprocessors.

South Korea is seen as the global leader in memory chip production, with major manufacturers such as Samsung and SK Hynix, but is not so strong in the microprocessors sector. According to data compiled by the Korea International Trade Association, the US is the leading global supplier of automotive semiconductors with a 31% share, followed by Japan with 22% and Germany with 18%.

The agreement is likely to result in Samsung supplying chips to Hyundai Motor Group which has been forced to cut vehicle output this year due to the current shortage.

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