Samsung follows other electronics giants into the auto industry

Samsung follows other electronics giants into the auto industry

Welcome to the age of the software-defined motor vehicle

Samsung has announced it will begin manufacturing electronics parts for the automotive industry, with a specific focus on autonomous vehicles.

The South Korean electronics giant is only the latest tech firm to make a somewhat belated push into the carmaker industry, as vehicle computer systems and sensors become more sophisticated.

In October, General Motors announced a strategic partnership with South Korea's LG Electronics. LG will supply a majority of the key components for GM's upcoming electric vehicle (EV), the Chevrolet Bolt. LG has also been building computer modules for GM's OnStar telecommunications system for years.

Apple and Google have also developed APIs that are slowly being embedded by automakers to allow smartphones to natively connect and display their infotainment screens. Those APIs led to the rollout in several vehicles this year of Apple's CarPlay and Android Auto.

Having formerly balked at the automotive electronics market as too small, consumer computer chipmakers are now entering the space with fervor.

Dutch semiconductor maker NXP is closing an $11.8 billion deal to buy Austin-based Freescale, which makes automotive microprocessors. The combined companies would displace Japan's Renesas as the world's largest vehicle chipmaker.

German semiconductor maker Infineon Technology has reportedly begun talks to buy a stake in Renesas.

Hyundai Motor Co. also announced this week that it's considering developing its own sensors and computer chips for its smart cars. The South Korean carmaker plans on spending $1.7 billion to develop smart vehicles and it expects to offer a fully self-driving car in 2030.

Adding to growth in automotive electronics are regulations mandating technology such as backup cameras in the U.S. and "eCalling" in Europe, which automatically dials emergency services in case of an accident.

According to a report published by Thomson Reuters, Samsung and its tech affiliates are ramping up research and development for auto technology, with two-thirds of their combined 1,804 U.S. patent filings since 2010 related to electric vehicles and electric components for cars.

The combined automotive software, services and components market is worth around $500 billion, according to ABI Resarch.

Thilo Koslowski, vice president of automotive and smart mobility services at Gartner, said the automotive semiconductor market alone is expected to reach $32.7 billion in 2016, up 5% over this year. That software is being used to manage an ever-growing number of integrated circuits, sensors and cameras in today's semi-autonomous and smart vehicles.

"There are easily 80 to 100 processors in a vehicle depending on their sophistication," Koslowski said. "Automotive software and hardware capabilities will become one of most sophisticated device platforms out there."

The automotive market, according to Koslowski, is now entering the age of the software defined motor vehicle.

Going forward, smart vehicles will not only offer sophisticated embedded electronics, but cars and trucks will also begin communicating with each other and larger infrastructures.

"I can envision Samsung expanding reach into all aspects of smart mobility," Koslowski said.

Samsung Electronics revealed its push into the automotive space during its annual structural reorganization in order to "pre-emptively respond to business uncertainties."

Initially, Samsung's automotive components team will focus on building electronics for infotainment and autonomous driving vehicles. The operation will be headed by Executive Vice President Jonghwan Park and overseen by Vice Chairman and CEO Oh-Hyun Kwon.

Samsung's smartphone business has seen flagging sales of late, and the company said it established a new automotive components team to "target and pursue new business initiatives to prepare for future growth."

"It shows you that electronics companies are very curious about the auto industry. They see it as a big growth opportunity," Koslowski said.

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