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Nov 20, 2023

In a significant move, Hyundai and Kia have secured their future semiconductor needs by inking a deal with Infineon, a major player in the chip industry. This agreement, lasting until 2030, specifically focuses on silicon carbide (SiC) and silicon power semiconductors, reflecting the growing importance of these components in the automotive sector.

The automotive industry, increasingly reliant on semiconductors, has faced significant challenges due to chip shortages, impacting production and delaying vehicle rollouts. To counter this, automakers like Hyundai and Kia are proactively securing their supply chains. Their partnership with Infineon not only ensures a steady supply of critical SiC and silicon chips but also includes funding to expand Infineon’s production capabilities.

Heung Soo Kim, Hyundai’s head of strategy, emphasised the strategic importance of this partnership, noting that it stabilises Hyundai and Kia’s semiconductor supply and highlights Infineon’s robust production capacity and technological expertise.

Infineon, known for its substantial presence in the power semiconductor market, will use the undisclosed funding from Hyundai and Kia to expand its Malaysian fab, poised to become the world’s largest 200nm SiC power facility. This expansion aligns with the rising demand for SiC chips, which are increasingly favoured in the automotive industry for their temperature resistance and stability at high voltages, making them particularly suitable for electric vehicles (EVs).

The demand for SiC chips is expected to surge, driven by their distinct advantages and the automotive industry’s shift towards EVs. Analyst Claudio Vittori predicts a rapid acceleration in the market demand for SiC-based devices. This sentiment is echoed by other industry players, like Allegro Microsystems, which also announced a significant SiC deal with BMW Group.

Looking ahead, the SiC segment is poised to become increasingly crucial. Governments worldwide are advocating for EV adoption to combat climate change, and automakers are responding by transitioning to fully electric lineups. As consumer interest in EVs grows, the demand for SiC chips will escalate, positioning chipmakers with secured deals and expanded production facilities to benefit substantially from this trend. For automakers, planning for the future and recognising the critical need for SiC components will be key to staying competitive in the evolving automotive landscape.

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