LG Electronics plans to internalize automotive semiconductor sourcing
LG Electronics has obtained the ability to directly design and verify automotive semiconductors.
The company recently received ISO 26262 certification from TUV Rheinland, a German testing and certification organization, for its development process of electronic control units (ECUs), microcontroller units (MCUs) and integrated circuits of power management (PMIC).
ISO 26262 is an international standard for automotive functional safety established by the International Organization for Standardization (ISO) to prevent accidents caused by system errors of electrical and electronic devices fitted to vehicles.
LG Electronics’ rating is Automotive Safety Integrity Level (ASIL)-D, the highest level of automotive functional safety. ASIL has four levels ranging from the lowest grade A to the highest grade D based on accident severity, frequency and controllability. Grade D is the strictest grade which requires a failure occurrence rate of less than once for 100 million hours of continuous use.
LG Electronics has been promoting the development of automotive semiconductors since late 2021. The move is seen as a step towards internalizing the semiconductor supply chain in response to the automotive market, which is experiencing production disruptions due to shortage of semiconductors.
Industry insiders predict LG Electronics will internalize the supply chain by securing the ability to develop semiconductors. They add that the company will start producing chips of its own development within one to two years at the earliest.
The lack of supply of semiconductors for vehicles is cited as the main factor that has delayed the turnaround of the VS Business Division. Since the beginning of 2021, the VS business division was expected to make a profit, but these expectations did not materialize due to a lack of automotive semiconductors.
LG Group shut down its semiconductor business 20 years ago. A financial crisis that hit the Korean economy forced the group to abandon its dream of a semiconductor empire. In 1999, under an agreement entered into by the Korean government, LG Semiconductor was sold to Hyundai Electronics. LG Siltron, a semiconductor wafer company, was sold to SK Group in 2017, and Silicon Works (currently LX Semicon) was spun off from the group in May 2021.
“LG Group was expected to re-enter the semiconductor business one day, given that semiconductors are used in many products manufactured by LG Electronics,” an industry insider said.