LG Elec eyes harvest from ambitious bet on automotive electronics from Q3 results

[Photo provided by LG Electronics Inc.]

LG Electronics Inc. anticipates harvest from its preemptive bet in automotive component business amid faster migration to electrified vehicles and advance in autonomous driving technology.

According to the automotive industry observers and securities companies, LG Electronics components solution (VS) division is expected to see its first profit in the second half since business launch in 2013.

LG’s VS division in the second quarter ended June narrowed operating loss by 101.5 billion won ($85.3 million) year over year to 103.2 billion won on sales of 1.88 trillion won, more than doubled over the same period.

LG Electronics will deliver earnings guidance for the third quarter on Friday. Sales are estimated to be best-ever 18.15 trillion won and income at 1.13 trillion won, according to consensus.

The Korean electronics giant has been making big strides in the global in-vehicle infotainment system and telematics markets.

LG’s VS division currently operate 20 overseas offices in major global markets, including Europe, North America, and China, as of this year for business partnership with international automakers.

It has been making bold actions since it announced to foster the automotive electronics parts business as its new growth driver in 2018.

In-vehicle infotainment system is a collection of hardware and software in cars that run communication and entertainment functions, such as navigation, phone calls and music.

The company on Sept. 23 announced its plan to acquire a 63.9 percent stake in Israel-based automotive cybersecurity firm Cybellum in the company’s third largest M&A investment. Earlier in March, LG Electronics launched Alluto, a joint venture it created with Swiss software firm Luxoft to offer connected car solutions based on the webOS Auto platform.

Its rapid growth in the global in-vehicle infotainment market is also backed by the surging demand for in-vehicle infotainment systems amid the faster-than-expected growth in EV demand worldwide and rapid advance in self-driving technology development.

[Photo provided by LG Electronics Inc.]

According to a recent report by MarketStudyReport, the global automotive infotainment systems market was estimated at $25 billion in 2020 and is forecast to grow at a compound annual growth rate of 8 percent between 2021 and 2027 to reach $42.85 billion by 2027. In-vehicle infotainment system demand from Asia is projected to expand even faster with a CAGR of 10.2 percent over the cited period. The region, where Korea, China, and Japan belong, already was responsible for the largest market share in 2020.

The outlook on LG Electronics’ telematics business also looks bright. The Korean firm claimed a 24.8 percent share in the global telematics market in the first half of this year, up 9.2 percentage points from a year ago. The company lost the No. 1 place to its German rival Continental AG last year but it is expected to win back the title this year.

Vehicle telematics merges telecommunications and informatics for wireless sharing of information. It serves as the brain for in-vehicle infotainment systems.

LG Electronics currently is developing a 5G network-based connected car platform, considered a key part for self-driving technology, jointly with Qualcomm, the world’s biggest supplier of mobile phone chips.

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