Industrial Convergence
Global IT giants are increasing their presence in the automobile industry. Google is planning to come up with a self-driving vehicle in 2017 and Apple is working on electric vehicles via its Titan Project. Rumor has it that Apple might acquire Tesla, and Xiaomi has declared its intent to launch a smart car business.
The ratio of automotive electronic components in an average vehicle is estimated to go up from 30 percent or so to 50 percent between now and 2030. Under the circumstances, an increasing number of automakers are looking to take over firms manufacturing such components. The global smart car market, which reached US$210 billion in 2013, is likely to show an annual average growth rate of 6.7 percent until 2018.
In this context, Samsung Electronics announced on Dec. 9 that it kicked off its own automotive electronic component business, adding that the start of this business does not mean it will resume the business of being a car supplier. Experts say the Samsung Electronics’ new business can take one of the three following directions.
The first one is similar to that of Google. The search giant has developed its own smart car OS for six years. Samsung Electronics could work on its own OS as well to directly compete with Google and Apple. The second one resembles that of LG Electronics, which is a specialized component supplier providing all types of automotive electronic components, ranging from batteries and camera modules to automotive MLCCs. The third possibility is what Samsung Electronics denied.
In fact, the company mentioned that its new business team would concentrate on in-vehicle infotainment and self-driving cars. Although it has a long way to go before it comes to the latter, Samsung Electronics is already faring well in the former. For example, it supplied a vehicle application dubbed Drive Link to Tata Motors last year and invested US$6.5 million in Vinli in June this year.
Its peer subsidiaries such as Samsung SDI and Samsung Electro-Mechanics are currently leading the global automobile battery and display component markets, too. The two companies are expected to execute large-scale investment and M&A plans in the near future. Samsung Electro-Mechanics said in its IR meeting in July that it was mulling over the acquisition of a well-known automotive component supplier. Samsung SDI, which recently prepared a fund of more than two trillion won through the sale of its chemical division, is predicted to invest the fund in this sector.