It was forecast that by 2020, the automotive semiconductor and integrated circuit (IC) market will continue to grow most. It is also predicted that as the proportion of electric parts in automobiles increases, an era of electric and autonomous vehicles will begin earlier than expected.
According to market researcher IC Insights on November 7, the market of automotive electronic systems will grow 4.9 percent on average from 2015 to 2020. Other electronic systems such as industrial and medical electronic systems are expected to grow 4.3 percent while the telecommunication market, 3.9 percent, the home electronics market, 2.8 percent on average. In addition, the government and military market and the computer market will swell 2.5 percent and 1.5 percent, respectively, on average.
IC Insights forecast that the percentage of automotive ICs in the entire IC market will increase from 7.9 percent this year to more than 10 percent after 2020. In the case of telecommunication, the share of the Asia-Pacific market in the entire telecommunication IC market will increase from 67 percent of this year to 70 percent in 2020. The proportion of electronic parts in automobiles is already on a sharp rise. According to market researcher Strategy Analytics (SA), the share of electronic parts for automobiles will increase from 30 percent in 2010 to 50 percent in 2020, and the market of electronic parts for automobiles will grow from US$239 billion in 2015 to about US$303.3 billion in 2020.
As a result, Samsung Electronics and LG Electronics are rapidly reorganizing their business into the sector of electrical and electronic products for automobiles. This is because the market of self-driving vehicles and electric cars is expanding, and the growth of smartphones, which were main revenue sources, is likely to slow down longer than expected. In addition, they judged that the electronic auto parts business is a new source of revenue that can replace smartphones.
Competition between Samsung and LG is expected to further intensify as an age of electric cars and autonomous vehicles become more visible. Samsung Electronics is seeking to expand into system semiconductors as well as memory semiconductors of the automotive electronics market. The company is also pursuing mergers and acquisitions to strengthen its related business such as the takeover of Magneti Marelli. Recently, the Korean electronics giant announced plans to invest more than one trillion won in its Austin plant in the United States, which is related to reinforcing its capabilities in the Internet (IoT) and automotive semiconductor business.
The LG Group is also expanding its business from infotainment into batteries by affiliates such as LG Electronics, LG Display, LG Chem, and LG Innotek, which already entered and established themselves in the electronic auto parts business early. The LS Group is also seeking to expand its electronic auto parts business with its subsidiary Daesung Electric Industry at the center. In 2013, MOBIS invested 60 billion won in Technology Research Institute in Yongin, Gyeonggi-do to build a research building for researching electronic parts only.
According to US IT website Business Insider and industry sources on November 7, autonomous cars, which numbered only 100,000 last year, are expected to increase to 5.49 million by 2020. The proportion of connected cars, which are currently around 15 percent, is expected to increase to 75 percent. The market of autonomous vehicles will reach US$ 115 billion annually and the cost of electronic parts per vehicle will exceed 50 percent around 2035. This is why Samsung and LG are trying to preoccupy the market.
Last year, Samsung Electronics reorganized the company to launch an electronic auto parts team under the DS and gave a big boost to the electronic auto parts business centered on semiconductors. It is expected to supply automotive infotainment, safety and autonomous mobile chipsets loaded with memories and system semiconductors. As for semiconductors, Samsung Electronics has a full lineup of APs (processors), DRAMs, NAND memories, display driver circuits (DDIs), CMOS image sensors (CISs) and modems among others.
Samsung Electronics recently signed a strategic tie-up with Audi to supply 20-nm DRAMs and 10-nm NAND memories. It is also known that it plans to increase its market share in a short time by way of the acquisition of Magneti Marelli, an Italian electronic auto parts company under consideration.
It is said that in the electronic auto parts business, LG is a little ahead of Samsung. LG has been making efforts in the electronic auto parts sectors for more than 10 years. It is commonly known that in terms of organization sizes, R&D results and business, LG is more stable than Samsung which is close to the one year anniversary of its electronic auto parts business.
LG Electronics is preparing for the growing market, such as moving its smartphone human resources to vehicle components (VC) business headquarters this year. Notably, analysts say that LG Electronics decided to shift its focus to preoccupying the electronic parts market as its new smartphones struggled one after another, leading LG Electronics to judge that it will be not easy to strengthen its control of the smartphone market which has been maturing this year.
LG Electronics is cooperating with GM, Volkswagen and others with its VC business headquarters taking the lead in the development of automobile telecommunication V2X technology. V2X technology connects vehicles and all objects such as vehicles and vehicles (V2V), vehicles and infrastructure (V2I), vehicles and pedestrians (V2P) and vehicles and mobile devices (V2N). LG Electronics have reportedly begun shipments of components (drive motors, inverters, in-car chargers, infotainment, battery packs, battery heaters, etc.) to GM for its Volt electric vehicles (EVs).The securities industry expects LG Electronics’ VC Division to increase its sales to 2.7 trillion won this year, 3.5 trillion won next year and 4.6 trillion won in 2018.