Samsung goes all out to catch up in car semiconductors

Samsung goes all out to catch up in car semiconductors

Most industrial experts agree Samsung Electronics is two or three years ahead of its competitors in memory chip technology. In automotive semiconductors, however, Samsung lags more than two years behind its rivals in Europe, Japan and the United States.

This means the world’s largest maker of computer chips and smartphones faces an uphill struggle when it jumps into the electronic equipment market for cars next year, experts here say. And at the center of the battle is how Samsung will be able to repeat what it has done in memory chips in its new business of supplying electronic equipment to cars.

An ordinary gasoline car has 200-300 semiconductors, on average, but electric and other smart cars require more than 2,000 semiconductors worth up to 700,000 won ($597), compared with 300,000-400,000 won for gas-fueled cars. The automotive semiconductor market is also estimated to grow from 33.63 trillion won in 2014 to 48.38 trillion won in 2021. “The DRAM market is to enter into a down cycle next year but car chips will grow steeply,” an analyst said.

About 80 percent of the top 25 makers are companies based in Europe, the U.S. and Japan, mostly specialized manufacturers that have been in the business for 20 to 30 years. According to the Korea Evaluation Institute of Industrial Technology, if Europe’s technological level is 100, those of the U.S. and Japan are 98.9 and 93.8 but that of Korea is only 70.5, lagging 2.1 years behind Europe.

Entry barriers are also high, forcing newcomers to undergo tough quality certification and a long development period, as the parts’ quality is directly related to consumers’ lives. Would-be market entrants may also find it hard to break the existing ties between automakers and parts suppliers.

Samsung may be able to find hope in rapidly changing industrial trends, however. “So far, automotive semiconductors have been largely for mechanical controls but the focus of the market will shift to electronic equipment in five or 10 years,” said Professor Lee Myung-hee of UNIST. “Not only will Samsung’s competitive edge in semiconductors be its big asset but also the company can always take over a specialized maker to enter the market smoothly.”

http://www.koreatimes.co.kr/www/common/vpage-pt.asp?categorycode=123&newsidx=193851

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