By Kim Yoo-chul
Samsung Electronics is seeking to form a partnership with Japanese car manufacturers Toyota and Nissan to expand its business territory into the promising automotive chip market, according to Samsung officials, Monday.
"Samsung Electronics has detailed business plans to develop chips to power networking systems in vehicles, as well as chips to be used in car-infotainment systems," said one senior Samsung executive by telephone, Monday.
"We are in talks with major Japanese automakers including Toyota and Nissan," he added.
If Samsung secures those car makers as its new clients, it will be one of company's greatest achievements since it began fabricating logic chips.
"Working-level discussions are under way," he said, adding its recent agreement with SK hynix for cross-licensing in all chip patents will help Samsung acquire knowhow as the SK Group affiliate is linked with the car battery business through SK Innovation.
He said that the electronics affiliate of Samsung Group is trying to find new clients to buy its advanced chips after its biggest but bitter customer Apple of the United States is cutting reliance on Samsung chips for i-devices.
In an attempt to hedge against its "client risk," Samsung is diversifying its client portfolio in memory chips and applications.
"The automotive industry is Samsung's next target in chips because they need trusted chip suppliers that can guarantee output commitment, better pricing and on-time delivery. Samsung is positioned well, therefore, discussions with those Japanese car makers are in progress," said the official.
As Samsung Electronics has so far little expertise and knowhow in automotive chips, the firm is collaborating with Korea's Hyundai-Kia for its trusted track record as a manufacturer for automotive chips.
In line with the strategy, Samsung Electronics is in the process of persuading Hyundai to adopt its automotive chips to be used in Hyundai Equus' car infotainment system.
Currently, infotainment systems of the luxurious sedan are being powered by Intel chips.
Samsung is expected to try hard in selling its logic chips for in-vehicle car infotainment systems for Toyota and Nissan as the area is nothing new to Samsung with CPUs built around the same British chip designer of ARM architecture and peripherals, that Samsung has manufactured in its Exynos-branded processors for smartphones and tablets.
"The key point is that Samsung's logic chip-manufacturing tech has improved over the past few years. This is a market where we can't lose," the executive said. He added all leading global automakers from Ford, General Motors to Renault are potential clients for Samsung.
However, the Korean chip giant still needs more time to supply logic chips for the engine and other body controls and even in-vehicle networking areas in a stable manner as automotive chips require huge reliability and increased safety, said officials and fund managers who run Samsung Electronics stocks in Seoul.
The automotive chip market, which is more stable in terms of growth and less volatile than conventional chips for PCs and other connected devices, is currently led by leading global players including Renasas Electronics, Freescale Semiconductor and NXP Semiconductors.
Market analysts say Samsung Electronics' shift toward chips for vehicles "does make sense" as leading car manufacturers are putting technology-enriched features such as advanced assistance systems on them.
"Leading car makers are investing heavily in electric vehicles amid government initiatives for eco-friendly projects, and that trend means there will be new demand for energy-efficient and high-voltage management chips. Samsung Electronics is highly aware of this," said a chief executive at one of Samsung's top-tier local suppliers in Korea, requesting anonymity.