SK Hynix's subsidiary, SK Keyfoundry, is gearing up to manufacture power semiconductors for Tesla's electric vehicles starting in the latter half of this year. Responding to China's aggressive expansion in legacy foundry sectors driven by pricing strategies, SK Keyfoundry has introduced a high-performance chip process tailored specifically for automotive applications.
Scheduled to commence production in July at their 8-inch wafer fab located in Cheongju, South Korea, SK Keyfoundry will produce Power Management Integrated Circuits (PMIC) for Tesla's electric vehicles. These PMICs, designed by a U.S.-based semiconductor design firm, will undergo manufacturing by SK Keyfoundry before being integrated into Tesla's electric vehicles. Tesla holds significant sway in the global electric vehicle market, known for its stringent demands in the automotive semiconductor sector, emphasizing reliability and performance. Industry observers point to SK Keyfoundry's advanced manufacturing capabilities and reliability as pivotal factors in securing this lucrative contract.
This strategic move is also viewed as a response to the competitive pressure from Chinese foundries. The Chinese government's support has bolstered the production capacities of local foundries like SMIC and Huahong through substantial subsidies, leading to aggressive price reductions and capturing of local clientele, disrupting the existing market dynamics. Similar to previous disruptions in markets like LCDs, a price competition instigated by China in the foundry sector is unfolding. Experts caution that failure to establish a foothold in the rapidly expanding automotive market could pose existential threats.
The automotive power semiconductor market is poised for substantial growth, projected to increase from US$20.8 billion in 2023 to US$32.5 billion by 2028, representing an average annual growth rate of 9.3%. Beyond Tesla, SK Keyfoundry collaborates with global automotive giants in the realm of vehicle power semiconductors. Recent successful production quality audits by prominent automotive parts suppliers Bosch and Continental underscore the confidence chip design companies have in entrusting their production to SK keyfoundry's high-quality manufacturing processes.