LG Electronics Begins ASIC Design Service Based on TSMC Processes

LG Electronics is entering the application specific integrated circuit (ASIC) design service market, leveraging its independent system semiconductor design capabilities. LG Electronics has designed system on chip (SoC) products for use in its own devices since the early 2000s, and it is now expanding this into an external service. The business model mirrors that of US semiconductor firms Broadcom and Marvell, and the target customers are domestic and overseas fabless companies.
According to the semiconductor industry on the 30th, LG Electronics has launched its design service business centered on the SoC Center under its Chief Technology Officer (CTO). A design service involves converting a semiconductor design circuit into a physical circuit suited to a foundry's production line.
Unlike a typical design house, LG Electronics provides ASIC design services. This follows the same business model as Broadcom and Marvell, with the company's in house SoC expertise developed through chips such as DQ-C serving as the foundation for the business.
Its first result is a robot vacuum cleaner chipset being mass produced under the "K On Device AI Semiconductor" national project. The chip is produced on TSMC's 6nm (nanometer, one billionth of a meter) process based on orders from a domestic fabless company, after which LG Electronics' HS Business Division repurchases it and installs it in robot vacuum cleaners. LG Electronics is reportedly in talks on design service cooperation with several domestic and overseas customers.
One semiconductor industry official assessed, "LG Electronics' SoC Center is a large scale specialized organization that supports the home appliance and automotive component businesses and possesses its own IP development capability," adding, "From a business diversification standpoint, the strategy of deploying its high end design workforce into external design services is a competitive choice in terms of both technical stability and business efficiency."
LG Electronics already holds an IP portfolio for processes at 6nm and below, and it reportedly plans to broaden its service scope to the 3nm (N3) process within the next three years, depending on customer demand.
Cost Savings Through In House Staffing... A "30 Year TSMC Partnership" Reference as a Strength
The competitive edge LG Electronics emphasizes is cost. Existing design houses relied on outsourced staff during the design process, resulting in high contracting costs. By contrast, LG Electronics uses a structure in which in house engineers handle the design directly, allowing it to reduce additional labor costs.
Its track record is also a strength. Even after selling LG Semicon in 1999, LG Electronics retained its design organization, effectively making it a fabless company. Having lost its production plants, LG Electronics began outsourcing chip production to TSMC in the early 2000s, a partnership spanning more than 20 years.
The industry expects that, on the basis of its relationship of trust with TSMC, LG Electronics will be able to offer support such as wafer allocation for customer volumes.
A fabless industry official who requested anonymity explained, "Most design houses tend to set high contracting costs because they rely on outsourced staff due to a shortage of their own personnel," adding, "LG Electronics is free from this labor cost burden and has a long standing relationship of trust with TSMC, which can make it an attractive option."
That said, LG Electronics is not a TSMC VCA (Value Chain Alliance). A VCA is a partner design house that has built a cooperative framework with TSMC. Under TSMC policy, outside of mainland Taiwan only one VCA may exist per country. In Korea, ASICLAND is the TSMC VCA.
Spillover Benefit From Samsung Foundry's Shift in Direction... Expected to Absorb Domestic Demand
The industry also expects that the contraction of Samsung Electronics' foundry legacy processes will be a boon for LG Electronics' design service.
A semiconductor industry official forecast, "As Samsung Foundry's legacy processes contract, some customers are turning to TSMC, which has abundant legacy capacity," predicting, "If LG Electronics rides this trend, it could draw in a substantial share of domestic demand."
An LG Electronics official responded, "We cannot confirm the matter."