This post was originally published on Charged.io, our new transportation site. Don’t miss: 15 of the best plug-in electric cars (August 2016)
Both Samsung and LG have bet big on the automotive industry becoming the driving force in information technology.
It’s nice to have confirmation from two of the world’s biggest tech companies. But we all know that electric cars, autonomous technology, car hailing schemes and even in-car entertainment are set for a quantum leap in the coming years.
“Automotive will ultimately be the next big thing in the information technology sector,” said Kim Do-kyun, one of Samsung Electronics’ memory division at the Mobile & IoT forum in Seoul. “It’s just a matter of time.”
The Internet of Things, Google Tango and more could revolutionize technology that isn’t even out in the wild. That’s how fast automotive IT is progressing right now.
What lies beyond autonomous cars?
We’re all looking at the autonomous tech, but the companies involved have to see further. What happens when we don’t have to drive the car anymore? We’re going to have a lot of free time on our hands.
“In the long term, autonomous driving will be a game changer for bringing in new lifestyle,” Kim said. “In the short and medium term, there are opportunities from infotainment, advanced driver assistance system, telematics. DRAM capacity for automobiles will catch up with that of smartphones from 2017.”
Samsung buying a seat at the automotive table
Samsung has embraced the auto industry as it clearly sees the industry converging with its own business model. Bloomberg recently revealed that the tech giant is negotiating to buy parts maker Magnetti Marelli from Fiat Chrysler Automobiles for more than $3 billion.
It has also bought a 1.92% stake in the BYD, which is one of the world’s biggest EV manufacturers.
Automobile electronics is reportedly worth $10.6 billion a year and that’s a figure that can only increase. Samsung wants a piece of the action and is prepared to pay for it.
“Samsung Electronics is fostering future growth engine through merger and acquisition strategies. Automobile electronics is expected to lead (Samsung’s) future growth business,” said Soh Hyun-cheol, a senior analyst from Shinhan Investment Corp.
Don’t forget LG, they’re coming too
LG Electronics, meanwhile, is working with GM to mass produce 11 core components for the new Chevy Bolt. They include the motors, inverters and infotainment systems. It’s just the start for LG, which opened a separate campus outside Seoul in June 2013 to focus on the burgeoning demand in the automotive industry.
The company believes this Vehicle Components (VC) division will be a huge earner for the company in the coming years, even though it is shipping losses right now. It posted a $15.23 million operating loss in Q2. Sales are up 47.9% year-on-year, however, largely due to the six-year deal with Chevy that starts this month.
“Automakers are very strict in terms of safety and form a long-term relationship, with only a few qualified parts suppliers due to safety concerns,” an LG Electronics official said. “That’s why it takes more time for us to generate tangible results in the business. We are still in the investment phase.”
This will drive sales
LG, though, expects the VC division to drive the firm’s sales in the second half of this year and is well worth the $360 million investment the company intends to make this year alone.
We can expect to see much more synergy between the traditional tech giants and the automotive industry in the years ahead. We have already seen Google build a car, Apple keeps talking about it and the traditional manufacturers have slowly accepted that self-driving EVs are the future after all.
Samsung, LG and more already have the required technology in place and it makes sense to work with them. So the next generation of cars could owe a great deal to the phone in your pocket.
We can’t wait to see the results.