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SK hynix subsidiary to supply semiconductors to Tesla

SK hynix’s foundry subsidiary, SK keyfoundry, is set to produce power semiconductors for Tesla electric vehicles starting the second half of this year. In response to China’s aggressive price-led expansion in the legacy foundry sector, SK keyfoundry has unveiled a high-performance chip process tailored for automotive use.

According to industry sources on May 15, SK keyfoundry will begin manufacturing Power Management Integrated Circuits (PMIC) for Tesla electric vehicles as early as July at their 8-inch wafer fab in Cheongju, South Korea. The PMICs, designed by a U.S.-based semiconductor design company, will be produced by SK keyfoundry and then installed in Tesla’s electric vehicles.

Tesla is recognized for its significant influence in the global electric vehicle market, both in terms of technology and production volume. The company is known for its stringent requirements in the automotive semiconductor sector, where reliability and performance are critical. Industry experts suggest that SK keyfoundry’s advanced manufacturing technology and reliability were key factors in securing this order.

This move is also seen as a strategy to counteract the offensive from Chinese foundries. The Chinese government has been boosting the production capabilities of local foundries like SMIC and Huahong by providing substantial subsidies. These companies have significantly lowered their service prices, sweeping up local customers and disrupting the existing market structure. Similar to past disruptions in the LCD market by Chinese companies, a price war initiated by China in the foundry sector is now emerging. Experts warn that failure to perform in the rapidly growing automotive market could pose existential risks.

The automotive power semiconductor market is expected to grow from US$20.8 billion in 2023 to US$32.5 billion in 2028, at an average annual growth rate of 9.3%.

Apart from Tesla, SK keyfoundry collaborates with global automotive companies in the vehicle power semiconductor sector. Recently, it has also passed production quality audits conducted by major automotive parts suppliers Bosch and Continental. This signifies that chip design companies supplying automotive semiconductors to Bosch and Continental are confident in entrusting their production to SK keyfoundry’s high-quality process lines.

The focus is also on the parent company, SK hynix, as SK keyfoundry, formerly part of Hynix Semiconductor’s non-memory business Magnachip Semiconductor, was incorporated into SK hynix as a subsidiary in 2022. Currently, SK keyfoundry has a production capacity of 100,000 8-inch wafers per month, but is facing competition from Samsung Electronics, which leads with advanced processes, and from DB HiTek, a strong player in legacy chips.

An industry insider mentioned, “From SK Group’s perspective, the foundry market is inevitably one that needs to expand its territory eventually to break away from the memory-centric structure.” Business Korea

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