Riding on Future Car Boom
Samsung Electronics and LG Electronics both achieved record-high quarterly earnings in the automotive electronics business in the third quarter. As the global auto market showed signs of recovery, the performance of electronics manufacturers also improved.
Harman International Industries, a U.S. audio electronics company which has been an independent subsidiary of Samsung Electronics since 2017, posted 3.63 trillion won in sales in the third quarter, up 51 percent from the same period of 2021. Its operating profit came in at 310 billion won, a 106 percent jump compared to the same period of last year and the highest ever quarterly profit.
"We capitalized on strong demand for connected car solutions in the third quarter,” a Samsung Electronics official said. “Orders from corporate customers increased, along with consumer audio sales.”
Harman signed a contract with Toyota in July to supply vehicle telematics devices for 5G communications. The exact size of the contract was kept under wraps, but industry insiders estimate it to be around 100 billion won.
Harman plans to expand into digital cockpit production. The digital cockpit is an electronic component that provides a safe driving environment through an infotainment system. Samsung Electronics accounts for a quarter of the global digital cockpit market.
LG Electronics’ automotive electronics unit turned a profit for two consecutive quarters, thanks to its active response to demand from automakers and continuous improvement in its cost structure.
The company's Vehicle Component Solutions (VS) Division logged sales of 2,345.4 billion won and operating profit of 96.1 billion won in the third quarter. Its sales increased 45.6 percent from a year ago, setting a new quarterly record, and its operating profit switched to the black.
LG Electronics explained that the VS Division's sales exceeded 2 trillion won for two consecutive quarters through an active response to automakers’ production expansion and effective supply chain management.
LG Electronics predicted that its order backlog in the automotive electronics business would cross 80 trillion won by the end of 2022. “The order backlog in the automotive electronics business was estimated at 65 trillion won in the first place but it is expected to exceed 80 trillion won due to a rise in the recent foreign exchange rate," an LG Electronics official said. "Infotainment system orders accounts for 60 percent of the order backlog."