Mobility sector emerges as new cash cow for Samsung

Samsung Electronics Executive Chairman Lee Jae-yong attends a state gala for Chinese President Xi Jinping in Gyeongju, North Gyeongsang Province, Nov. 1. Yonhap

The mobility industry is emerging as a new cash cow for Samsung Group, with its affiliates taking proactive approaches to supply chips, batteries, displays and other electric or electronic parts for global carmakers.

According to industry officials on Tuesday, Samsung Electronics Executive Chairman Lee Jae-yong is set to have a meeting with Mercedes-Benz Group Chairman Ola Kallenius during the latter's visit to Seoul for a Mercedes-Benz conference on Friday.

Lee is expected to be accompanied by Samsung SDI CEO Choi Joo-sun, Samsung Display CEO Yi Chung and other executives of key Samsung affiliates, implying that the meeting will likely cover a broader range of cooperation between the Korean conglomerate and the German auto giant over chips, batteries, displays and other auto parts.

Their partnership has been mostly centered on Harman, a Samsung Electronics subsidiary that has been supplying premium car audio systems and the Mercedes-Benz User Experience infotainment system.

While Samsung Electronics supplies the Mercedes-Benz digital key through Samsung Wallet and Samsung Display provides OLED panels for the automaker’s Maybach lineup, their partnerships have yet to expand into full-scale collaboration in core component areas.

Against this backdrop, Samsung SDI’s presence in the meeting is gaining attention. Mercedes-Benz’s electric vehicles (EVs) have maintained a larger reliance on Chinese batteries, but the automaker is seeking to diversify its supply channels. As a result, the Lee-Kallenius meeting could be an opportunity for Samsung SDI to join Mercedes-Benz’s supply chain.

Samsung Electronics is also expected to leverage the meeting as a chance to expand its client base for chips for advanced vehicles.

Samsung Electronics has expanded its customer base by supplying its Exynos Auto series automotive chips to Hyundai Motor, following previous deals with Audi and Volkswagen. In July, the company secured a massive $16.54 billion chip supply contract with Tesla and plans to produce the AI6 semiconductors from its fab in Texas.

Mercedes-Benz is now making efforts to secure high-performance semiconductors for its own operating system, and Samsung foundry’s 3-nanometer class fabrication process is one of the likely options for producing the carmaker's chips.

Samsung Electronics Executive Chairman Lee Jae-yong, center, inspects manufacturing equipment for multilayer ceramic capacitors during his visit to a Samsung Electro-Mechanics plant in Calamba, Philippines, Oct. 6, 2024 (local time). Courtesy of Samsung Electronics

If realized, Samsung Group’s partnerships with Mercedes-Benz would mark the latest outcome of Lee’s push into the automotive electronics business.

Since taking the leadership of the group, Lee’s first major deal under his watch was the 2016 acquisition of Harman, which has become one of Samsung Electronics' major revenue sources. In the third quarter of this year, Harman posted 4 trillion won ($2.73 billion) in sales and 400 billion won in operating profit, representing year-on-year increases of 13.3 percent and 11.1 percent, respectively.

Lee also frequently inspects Samsung Electro-Mechanics automotive multilayer ceramic capacitor (MLCC) plants, including visits to the Busan plant in 2020 and the Calamba, Philippines, plant last year.

In March, Lee also visited BYD’s headquarters in Shenzhen and Xiaomi’s EV factory in Beijing to explore potential collaboration opportunities in automotive electronics with Samsung affiliates.

Lee is increasing his engagement with the mobility industry because the sector's future aligns closely with Samsung Group’s core businesses in electronics and electrical components.

While internal combustion engine vehicles typically use 200 to 300 semiconductors, electric vehicles are expected to require 500 to 1,000, and autonomous vehicles more than 2,000. Each electric vehicle also uses between 20,000 and 30,000 MLCCs.

“Samsung Electronics and its affiliates are demonstrating strong competitiveness in automotive semiconductors and components, in line with the ongoing digitization and electrification trends in the mobility industry,” an industry official said.

“As proven in Harman’s earnings trajectory, mobility solutions are no longer an additional business for Samsung, but stand as the group’s core business domain.”