Samsung, LG Expand Battlefield to Auto Electronics

Samsung has created a new department specializing in automotive electronics in its organizational shake-up last week, more than two years after perennial rival LG launched a vehicle components division.

That means Korea's top two electronics companies have found yet another area in which to battle it out following decades of intense competition in the home appliance, handset and other sectors.

◆ Similar Key Areas

The automotive electronics industry is growing fast as smart car technology evolves. Self-driving cars being developed by Apple and Google and the Tesla electric vehicle are spurring development in the field.

According to market researcher Strategy Analytics, the automotive electronics market is expected to rise from US$239 billion last year to $303.3 billion by 2019, 1.7 times bigger than Samsung's entire W206.2 trillion sales last year (US$1=W1,185).

At present the top players are Continental of Germany and Panasonic of Japan, with Samsung and LG mere fledglings in the field.

Samsung will focus initially on car navigation systems and other driving devices that are comfortably established and can produce quick results without massive investment. It will then reportedly expand into the automotive chip business.

Getting a headstart, LG has already ranked at the top of the global telematics industry for three years. It is also branching out into the electric vehicle component business including batteries and motors, supplying 11 core components for GM's Chevy Bolt due out next year.

◆ Respective Advantages

Both companies have forayed into the business by tapping into their IT capabilities, prompting analysts to speculate that they will once again end up rolling out similar products, as they have done since time immemorial.

Already Samsung SDI and LG Chem are competing fiercely in the automotive battery market, and that is only a snapshot of Korea's peculiar business structure, where the big family-owned conglomerates all have a finger in every pie and rivalry often seems like an end in itself.

For now, LG has the advantage since it has had time to establish a substantial client base among automakers. Also, Samsung's previous failure in the car market via Samsung Motors (now owned by Renault) could tell against it.

But some analysts believe that Samsung's memory chip prowess will soon give it an advantage over LG, which does not make its own computer chips. Smart cars will require faster memory chips that can store and process huge amounts of data as they get more sophisticated, and here Samsung holds the trumps.