Korean display, chip companies bet on car electronics business growth

Korean display, chip companies bet on car electronics business growth [Image source: LG Electronics]

Car electronics business is emerging as a robust new growth engine for Korea’s major IT companies as they already play a role in creating cash flow while existing businesses are under pressure for disappointing earnings due to slow demand.

According to sources on Sunday, LG Electronics Inc.’s VS division generated 8.65 trillion won ($7.03 billion) in sales last year. The business swung to an operating profit of 169.6 billion won. The division is responsible for the development and production of in-vehicle infotainment systems and parts for self-driving cars, among others.

Harman International, a wholly-owned subsidiary of Samsung Electronics Co., is also expected to post solid earnings. The car electronics company, which reported an operating profit of 515 billion won until the third quarter of last year, is expected to achieve its highest annual performance. Analysts estimate that Harman’s operating profit for the fourth quarter will be 200 billion to 300 billion won.

The strong performance of car electronics business is the same for other companies such as Samsung Electro-Mechanics Co. and LG Innotek Co.

Earlier, Samsung Electro-Mechanics said it will develop and produce multilayer ceramic capacitors (MLCCs) for car electronics, citing automobile business as its future growth engine. The market is huge as one electric vehicle requires more than 10,000 MLCCs compared with about 1,000 for one smartphone.

LG Display Co. chose vehicle display and vehicle sound solutions as market creation businesses. The vehicle sound solution is an innovative technology that can reduce the difference in sound quality depending on the passenger’s position by installing film-type speakers on the ceiling and dashboard.

Semiconductor companies such as Samsung Electronics and SK hynix Inc. are also highlighting their automotive semiconductors as key areas to overcome the current chip “winter”.