South Korea’s Hyundai Motor Group is out to localize automotive chips to ensure undisrupted supplies by teaming up with foundries at home.

According to industry sources on Monday, Hyundai Mobis responsible for parts for Hyundai and Kia vehicles has proposed a joint project with DB HiTek Co. and Key Foundry Co. to establish automotive chip value chain.

The project will involve power management integrated circuits (PMICs) and microcontroller units (MCUs) that are needed in large quantity to power latest cars of connectivity and electronics functions, sources said.

Hyundai Mobis officially denies the project or having discussions with local foundries. But multiple sources claim the auto conglomerate has already moved on with the vision to localize auto chips.

Hyundai Mobis would design the necessary chips and consign the production at the foundries. The group also could consider taking over a fabless company to design its chips on its behalf.

Car productions have been disrupted at the group’s manufacturing lines at home and the United States due to chip shortage. Its Alabama plant is suspended maximum three weeks from this week for chip adjustment and maintenance.

Chip shortage is expected to affect production of about 4-6 million cars globally, according to Boston Consulting Group. “Auto and auto parts makers much be prepared for the chip crisis for a year from now and thus, close cooperation with chip makers is inevitable,” said Kim Min-ji, a consultant at Boston Consulting Group.

Hyundai Mobis shares closed 0.35 percent higher at 289,000 won in Seoul trading on Tuesday, and DB HiTek 0.18 percent up at 55,500 won.

By Chung Seung-hwan, Lee Jong-hyuk, Park Yun-gu, Park Jae-young and Lee Ha-yeon

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