Korean firms eye market for cars’ brains and nerves

By Kim Da-ye

The genuine evolution in the automotive industry may not be electric vehicles, but rather, smart cars.

Features commonly seen in science-fiction movies such as automatic parking, remote control via smartphone apps and built-in WiFi are now offered in mass-market vehicles like the Volkswagen Golf, the Hyundai Santa Fe and the Ford Focus.

Smart cars rely heavily on electronics. Automotive electronics ranging from engine control units to sensors for air bags and infotainment systems are expected to account for 40 percent of the total vehicle cost in 2015 _ up from some 20 percent in 2005 ― consulting firm McKinsey & Company stated in a report, “Managing innovations on the Road.”

The report was written seven years ago, but the domestic industry still relies on the figures to make a forecast. It also said that annual turnover generated by the electronic components could grow to $200 billion in 2015 from $120 billion in 2005.

To control and coordinate basic functions such as braking and steering as well as advanced feats such as automatic parking, vehicles need brains and nerve systems. The smarter automobiles become, the bigger demand there is for these faculties.

However, these core components are rarely produced domestically. More than 90 percent of them including semiconductors for cars are supplied by foreign manufacturers such as Germany’s Robert Bosch and Delphi in the United States.

Only recently, Korean companies began reacting to the inconvenient yet potentially lucrative prospect that automobiles will eventually become electronic devices on four wheels.

The beginning of the change involves Korea’s two largest conglomerates ― Hyundai Motor Group launched electronic component developer Hyundai Autron and Samsung Electronics is laying the foundation to enter the industry.



Hyundai vs. Samsung

In April, Hyundai Motor Group, Korea’s largest carmaker and the world’s fifth, set up Hyundai Autron ― Autron is a compound name taken from the words automotive and electronics.

The group already operates an affiliate making electronic components, Hyundai Mobis, which was focused on finished auto parts such as a line departure warning system and a smart parking assistance system.

Autron will touch more fundamental areas ― the brains and nerve systems ― of automotive electronics.

It aims to develop its own electrical and electronic architecture, semiconductors, embedded control software, electronic control units (ECUs) and communication networks, to eventually establish electronic control systems independently.

The electrical and electronic architecture is a framework for how components are positioned and connected. If it looks like a tree, the tips of the branches will be ECUs that control key systems in the automobile such as the engine and the transmission. The ECUs are embedded with semiconductors and programmed with software.

Communication networks manage signal exchanges among different parts to ensure they work in harmony

Hyundai Motor Group said that a modern vehicle is fitted with some 200 system semiconductors and electronic parts accounting for 20 to 30 percent of the production cost.

“Semiconductors are, in general, tailored to each vehicle model. Because of a lack of economy of scale, it was hardly produced domestically,” the automotive maker said in a release.

Autron plans to boost the number of employees in the research and development team from 200 to 400 this year and up to 500 next year. In particular, the firm will foster talent in the fields of semiconductors and electronics-controlling software, the group said.

In May, Hyundai Motor Group said goodbye to Bosch by buying the German supplier’s stake in Kefico, a 50-50 joint venture between the two companies.

Hyundai Motor Group’s declaration to develop semiconductors independently has been interpreted as the conglomerate challenging the Samsung Group whose heir apparent began touring the world and meeting with heads of major global car makers.

Lee Jae-yong, president of Samsung Electronics and the eldest son of the group owner Lee Kun-hee, met with General Motors CEO Dan Ackerson last October, Toyota Motors President Akio Toyoda in January, BMW Chairman Norbert Reithofer in February and Volkswagen CEO Martin Winterkorn in April.

Within Samsung Group’s future strategy office, the new business planning team is allegedly coordinating among various affiliates to lay the groundwork to enter the automotive electronics market.

“Although automotive electronics wasn’t identified as one of the five new growth engines, it is clear that the group is highly interested in the business, judging by unprecedented briefings done on the subject abroad,” an official at Samsung Group said.

He said that the group is likely to focus on batteries and automotive semiconductors but it is too early to discuss any specific plans.

If Samsung does enter the industry, there are many areas its affiliates can work on _ for example, Samsung SDI for electric vehicle batteries and Samsung Electronics for semiconductors, infotainment systems and LED headlamps.

Risk of glitches

While electronic components have made driving experiences more comfortable and convenient, an increasing reliance raises safety concerns.

While a software crash on a smartphone may not cause harm to its user, a glitch in an automobile’s electronic system could lead to a severe accident.

Furthermore, for a giant product such as a car, built with tens of thousands of parts, it isn’t easy to figure out what went wrong.

A Volkswagen Phaeton sedan, for instance, is built with 11,136 electrical parts and 61 electronic control units (ECUs).

The large quantity of electronic components in vehicles is believed to have increased the likelihood of unintended acceleration although the automotive industry denies this, citing a lack of evidence.

When Toyota Motor recalled globally millions of vehicles for the problem between 2009 and 2011, some experts and consumers had suspicions that the electronic control of the accelerator pedal was responsible.

The U.S. government investigated the claim in conjunction with the National Aeronautics and Space Administration (NASA), but found faults in the electronics.

“It is unlikely that the number of incidents of unintended accelerations would decrease. All sorts of safety devices for prevention are now required, but the number may go up along with the rising quantity of electronics in vehicles,” said Kim Pil-soo, a professor of automotive engineering at Daelim University College, in Anyang, south of Seoul.

In Korea, 241 cases of unintentional acceleration were reported last year with Hyundai Motor accounting for 40.7 percent of the complaints, according to the Korea Consumer Agency.

The life-threatening incidents recently received a great deal of attention as videos of cars suddenly accelerating and passengers panicking are circulating on the web, thanks to the widespread distribution of black boxes.

Electronics are still regarded with suspicion as a possible cause of such problems while domestic carmakers blame poor driving skills.

In the meantime, the industry has tried to promote more stable and safer automotive embedded systems by introducing standards.

The biggest effort by the global automotive industry is so far the joint establishment of the AUTOSAR (Automotive Open System Architecture), which pursues standardization of the basic software for electronic control units.

Because electronic components in an automobile come from multiple suppliers, integration is the key to safety.

Francoise Simonot-Lori, professor of Nancy Universite ­ Loria in France, made an accurate portrayal of today’s safety measures for electronic embedded systems in a 2006 presentation, by comparing automobiles to airplanes.

Pilots are highly trained and qualified while drivers aren’t. There are strict requirements for maintaining planes, and that isn’t the case for automobiles.

Electronics in airplanes are developing steadily while automotive components are continuously evolving.

During the global recalls by Toyota, some drivers were even concerned that signals from mobile phones could interfere with electronic components and cause unintended acceleration.

Electrical and electronic systems in automobiles will become even more complex in the future, but it’s likely no one will want to switch off their phone when getting into their car.