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Crossover between Industries Increasing
Auto Electronics
Crossover between Industries Increasing
  • By matthew
  • August 20, 2013, 08:55
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Google's Lexus RX450h driverless car - a sign of things to come. (Photo courtesy Mariordo/Wikimedia Commons)
Google's Lexus RX450h driverless car - a sign of things to come. (Photo courtesy Mariordo/Wikimedia Commons)

 

"It is just a matter of time before Hyundai Motor Company (HMC) makes secondary rechargeable batteries [electric vehicle batteries] and Samsung Group, SK Group, and LG Corporation manufacture electric cars."

"With automobiles outfitted with electronic equipment, those four companies are already producing auto parts for electronic equipment," said an industry source on August 18. 

As the source said, the phenomenon where electronics makers and auto manufacturers enter each other's business is accelerating in Korea. 

Samsung, HMC, SK, and LG are in intense competition over the sector of the auto components industry that specializes in electronic equipment. It means that even though only Hyundai fully builds cars, all of them are major players in the field.

Among them, Hyundai Motor Company is in an advantageous position. Although the company does not make electronic products per se, its greatest strength is in its technical expertise in the auto industry. HMC's auto components for electronic equipment are produced at Hyundai MOBIS, KEFICO, and AUTRON. 

To get a foot in the door, the KEFICO Corporation, which was jointly established by the Bosch Group, became a wholly owned subsidiary of HMC. And Hyundai AUTRON was founded for the technical development of semiconductors in vehicles and electronic control units. According to an analysis of KDB Daewoo Securities, KEFICO is in charge of the production of power trains, MOBIS with brakes, suspension and steering, and AUTRON with software and semiconductors.

According to the Data Analysis, Retrieval, and Transfer System (DART), Hyundai MOBIS and KEFICO invested approximately 400 billion won (US$356.8 million) in R&D. Since HMC is planning to focus on the development of eco-friendly vehicles, its project of auto parts for electronic equipment is likely to accelerate.

Samsung Group has also bolstered its business in the field, after selecting secondary batteries as its next-generation business in 2009. What is striking is that more projects are done under the radar.

The Group’s disclosed auto parts are Samsung SDI's mid-large sized secondary cells, Samsung Electro-Mechanics' precision motors, and Samsung Total's materials for vehicle weight reduction. The group is rumored to be expanding its items very soon, because it is undertaking research on various kinds of auto components for electronic equipment led by Samsung Electronics, a major subsidiary of Samsung Group, as well as the Samsung Advanced Institute of Technology (SAIT).

LG Corporation's moves are noticeable as well. Amid LG Chem's early participation in the business of secondary batteries, LG Electronics has also entered the vehicle components business. The prime example is LG's establishment of a new Vehicle Components division that combined component-related business units in July. In addition, the group showed its determination to expand business by building an R&D center in Incheon designed specifically for automotive components. Furthermore, LG Innotek, which holds the technology of an intelligent headlight system, is stepping up its auto components business. Thus, the scope of LG's auto parts business is expected to grow from secondary cells to headlamps, auto components for infotainment, motors for electric cars, and compressors. 

Finally, SK Group is also active in this business. SK innovation is accelerating in the development of secondary batteries. Despite its belated entry into the market, its partnership with a global vehicle components business sparked anticipation that SK will expand its business. Moreover, SK telecom is creating synergy between subsidiaries by engaging in the field of auto parts.

An official at the Korean Institute for Industrial Economics and Trade (KIET) said, "Profitability and synergy can be made possible only if companies that manufacture auto components for electronic equipment include fully-built car parts," adding, "The example is that Google is developing automated electric cars in partnership with a company with expertise.” 

The KIET official continued by saying, "Hyundai Motor Company has been involved in R&D for secondary batteries for a long time, while other groups such as Samsung, SK, and LG have been examining numerous possibilities for making electric cars including a joint venture." It indicates that those four groups moving into the industry is highly likely.