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Samsung and auto technology on the run

South Korean company Samsung Electronics is trying to extend its business by initiating supply of technology to car makers, while rivals are desperately trying to get into the market.

Data compiled by Thomson Reuters IP & Science shows the world’s top smartphone maker and other Samsung Group tech affiliates are ramping up research and development for auto technology, with two-thirds of their combined 1,804 U.S. patent filings related to electric vehicles and electric components for cars coming since 2010.

The analysis did not include filings made after 2013 due to a lag between filing and publication.

They haven’t yet landed significant business, and Samsung Group declined to comment on strategy, but the lure is obvious.

Automakers already incorporate or are developing technologies to enhance safety and provide better smartphone connectivity and entertainment systems, creating an opening for tech companies to break into a market for software, services and components that is worth around $500 billion, ABI Research analyst Dominique Bonte said.

“There are two trends: the car becomes a connected software device, and the entire mobile and ICT ecosystem is getting very interested in playing a part in that evolution,” Bonte said.

That is particularly welcome as demand for smartphones, TVs and computers slows, but Samsung is arriving late at a party where some of the best partners are already taken.

Cross-town rival LG Electronics announced a major supply agreement with General Motors in October, sending LG’s shares surging, while U.S. chipmaker Nvidia Corp, known for graphics processors that power games consoles and laptops, says its chips will be in more than 30 million cars in the next three to four years.

Unlike Apple and Google, there is no clear sign yet that Samsung is developing its own autonomous driving technology.

IHS analyst Danny Kim said Samsung Group does not yet have a unified, group-wide approach to building its supplier presence in the industry.

“Samsung needs a serious commitment to drive the synergies between all competent organisations within Samsung Group,” he said.

A decade after selling its debt-laden carmaking unit to Renault, Samsung Group in 2010 announced its second foray into the auto industry, identifying car batteries as one of its five growth businesses.

Its Samsung SDI is now the world’s No. 6 electric car battery maker, counting BMW, Chrysler and Volkswagen among its clients.

Other parts of the Samsung empire are now in the hunt.

Samsung patent filings show a wide range of technologies including a drowsy-driving detection system, an alert system for break-in attempts and a transparent display for directions and traffic information.

Samsung Electro-Mechanics recently formed a dedicated team to sell components such as camera modules to new auto clients and says it would consider acquisitions to boost car-related businesses.

Samsung Display has also cited the auto industry as a potential growth area and has been testing its organic light-emitting diode (OLED) displays with BMW and auto parts maker Continental.

Nvidia says its autos revenue was $148 million for the first half of this fiscal year, nearly doubling in a year.

Consulting firm McKinsey said in a 2014 report that revenue from hardware, software and services for connectivity-enabled cars could grow to 180 billion euros ($200 billion) by 2020 from an estimated 30 billion euros in 2014.

Carmakers may spend an additional $6,500 per car when they launch fully autonomous vehicles, the Boston Consulting Group said in a report this year.

 

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