Samsung Electronics to Supply Automotive Semiconductors to Tesla

Dec 09, 2016

Samsung Electronics is jumping to an automotive semiconductor business. It is going to develop its own SoC (System on Chip) for self-driving cars and start a foundry service as well. As it decides to enter automotive semiconductor markets, DS (Device Solution) System LSI Business Department is going to be divided into Foundry Business Department and Design Business Department and it is going to make such announcement about the same time as Samsung Group’s periodic personnel evaluation and reorganization of Samsung Group.
According to an industry on the 8th, Samsung Electronics recently signed a contract with Tesla regarding ASIC (Application-Specific Integrated Circuit) foundry. ASIC foundry is a business where a company designs and manufactures semiconductors according to specifications that were requested by a customer. If there is a difference between ASIC foundry and a regular foundry, it is the fact that ASIC foundry is in charge of designing semiconductors also. Apple also had had Samsung Electronics be in charge of ASIC foundry early on, but it decided to design its own semiconductors after acquiring PA Semi.
Tesla had been receiving self-driving technology’s major chip technology from Israel’s Mobileye. However this partnership ended when a driver, who was driving Tesla with an auto-pilot mode on, died due to an accident. After this accident occurred, Tesla decided to develop its own chips. Although Tesla is receiving AI chips regarding self-driving technology from NVIDIA, it has made a partnership with Samsung Electronics with a plan of developing its own chips. This partnership is similar to a strategy that was carried out by Apple.
Currently Samsung Electronics’ System LSI Business Department Foundry Business Team’s personnel with a ranking of an executive director is overseeing this project. “This is a long-term project that requires about 3 years for design, production of prototype, and mass-production.” said a representative for an industry. “Working with a leading company like Tesla will provide an opportunity to greatly increase capability of Samsung Electronics’ automotive field.”

Tesla’s Model S (Database from The Electronic Times) <Tesla’s Model S (Database from The Electronic Times)>

Ever since Samsung Electronics signed off on a contract with Tesla, discussions regarding division of Foundry and Design Business departments that are within System LSI Business Department have been taking place. System LSI Business Department had been receiving management diagnosis throughout first half of this year in order to overcome situations where its performance dropped due to one or two of its customers. Fact that Apple asked TSMC to supply chips triggered such management diagnosis.
Major reason why Apple chose TSMC over Samsung was due to a possibility that information from its customers might get leaked. Apple had been expressing its concerns about this possibility as president-level personnel had been pushing for development of its own chips and foundry business at the same time. This is same for other customers as well. Tentative decision that was made by Samsung’s management diagnosis team was division of foundry and design business departments. However it was not able to make this decision very easily. Representatives from inside and outside of Samsung Group explained that this decision was solidified when Tesla requested complete security of its information.
Samsung Electronics’ System LSI Business Department is developing its own automotive SoC and it already started on its first project with Audi. Department Head (President) Kim Ki-nam of System LSI Business Department made a strategic partnership with Audi at the end of last year regarding automotive semiconductors. At that time, it was heard that partnership was regarding supply of memories. However major point of this partnership was about development and supply of SoC for infotainment. It is predicted that Samsung Electronics’ SoC will be used for new 2019 Audis.
“Notification of relocation of major personnel had been made already.” said a representative who is familiar with Samsung Electronics’ DS sector. “People inside of Samsung Group is also aware of such information regarding reorganization of Samsung Group.”
It is predicted that weight of Samsung Electronics’ DS sector’s business will shift from mobiles to automobiles due to reorganization of Samsung Group and new projects. Many predict that Electric Equipment Business Team, which is under Vice-Chairman Kwon Oh-hyeon, will be promoted to Electric Equipment Business Department during Samsung Group’s periodic group reorganization as size of this team has grown when it acquired Harman. It is predicted that a president will be selected to become a department head. It is heard that Samsung Electronics’ electric equipment business is shifting towards global markets for automotive components as it increases level of cooperation with semiconductor sector.
Staff Reporter Han, Juyeop | powerusr@etnews.com

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