Samsung Electro-Mechanics and LG Innotek Accelerate 'Automotive Electronics Business' Amid Rapid Growth of Future New Industries

[Asia Economy Reporter Ki-min Lee] Samsung Electro-Mechanics and LG Innotek are accelerating their efforts in the automotive electronics business, which is emerging as a future new industry.

According to industry sources on the 14th, Samsung Electro-Mechanics and LG Innotek, parts affiliates of Samsung and LG respectively, are reorganizing some of their existing businesses and stepping up their automotive electronics operations.

According to related industry sources, Samsung Electro-Mechanics is currently in the process of selling its Wi-Fi module business division. Samsung Electro-Mechanics' Wi-Fi modules rank second globally in market share after Japan's Murata. However, this move is interpreted as a strategy to focus more on high-end products such as 5G and MLCC.

In particular, Samsung Electro-Mechanics plans to increase the sales proportion of automotive MLCC products in its core business segment of multilayer ceramic capacitors (MLCC) to boost its global MLCC market share. With the advent of autonomous vehicles and electric vehicles, demand for automotive MLCCs is expected to surge rapidly, and the industry anticipates the automotive MLCC market to grow by more than 20% annually.

To keep pace, Samsung Electro-Mechanics established an MLCC production plant in Tianjin, China, where global automakers have entered, back in 2018. Domestically, it is also building an automotive MLCC line in Busan and expanding the business. In a conference call announcing third-quarter earnings at the end of last month, Samsung Electro-Mechanics stated, "The sales proportion of automotive MLCCs in the third quarter was slightly below 10%, but continuous sales growth is expected in the fourth quarter, aiming to push the sales proportion above 10%."

LG Innotek is also focusing on the automotive parts business while restructuring businesses with weakened price competitiveness. LG Innotek plans to produce LED products only until the end of this year but will continue its vehicle lighting module business. The LED business has seen profitability decline due to intensified price competition from latecomer Chinese companies. However, the industry expects the efficient automotive LED market to grow from $30.9 billion (approximately 35 trillion KRW) last year to over $37 billion (approximately 42 trillion KRW) in 2023.

Since launching its own brand 'Nexlide' in 2014, LG Innotek's LED business has grown by more than 100% annually. Nexlide is a vehicle 3D lighting product that supplies not only lighting modules but also control modules, resulting in high added value.

LG Innotek plans to further strengthen its business portfolio by focusing its capabilities on high-value-added vehicle lighting modules. Alongside this, the company intends to actively improve overall profitability by restructuring loss-making businesses.

In particular, LG Innotek is driving sales growth with steady performance increases in automotive power modules such as cameras for Advanced Driver Assistance Systems (ADAS), DC-DC converters, and others. Additionally, it is generating synergistic effects by serving as a supply chain partner for ZKW, a headlamp company acquired by LG Electronics in 2018.

This content was produced with the assistance of AI translation services.