Samsung and LG automotive units become core revenue sources as leaders’ strategies pay off - IT조선

Efforts by Samsung Electronics Chairman Lee Jae-yong and LG Group Chairman Koo Kwang-mo to foster their automotive electronics businesses are bearing fruit as the units settle as core revenue sources for the conglomerates. The chairmen have demonstrated distinct leadership through decisive mergers and acquisitions (M&A) and maximizing synergy among affiliates, respectively. Consequently, the businesses of both companies, which previously focused on home appliances and smartphones, have established business-to-business (B2B) automotive electronics as a central pillar. Samsung Electronics Chairman Lee Jae-yong made a decisive move in 2016 by acquiring Harman for 9.4 trillion won ($6.8 billion), the largest overseas M&A by a South Korean company at the time. Lee led the acquisition, personally meeting with Harman's management to finalize the contract and laying the foundation for Samsung's automotive electronics business. Harman, which initially faced concerns over poor performance, achieved record results in 2025 with 15.8 trillion won in revenue and 1.5 trillion won in operating profit. This success has solidified its global leadership in digital cockpits and car audio. The acquisition of Germany’s ZF’s Advanced Driver Assistance Systems (ADAS) unit by Harman for approximately 2.6 trillion won in December 2025 also reflects Lee’s "super-gap" strategy. The move is a tactical step to leapfrog into a comprehensive automotive electronics firm by preoccupied with the autonomous driving market. Harman is strengthening its competitiveness in the Software-Defined Vehicle (SDV) platform by combining Samsung Electronics' capabilities in semiconductors, telecommunications, and displays. It has secured a stable hardware supply base by implementing connected car functions based on 5G technology. Samsung Electronics plans to invest approximately 2.3 trillion won in Hungary to expand its autonomous driving R&D center and Harman's production base. Lee is actively fostering Harman as a future growth engine by directly contacting global automakers. "Harman is growing into a top-tier automotive electronics and audio company through continuous future investment under the full support of its parent company, Samsung Electronics," a Samsung official said. Lee has established a dedicated M&A organization under the Business Support Office and placed personnel who led the Harman acquisition at the forefront. The strategy is to continue pursuing additional large-scale M&As in new growth areas such as robotics and medtech, in addition to automotive electronics. LG Chairman Koo Kwang-mo, since taking office in 2018, made the decision to terminate the smartphone business and set automotive electronics as the group’s core growth axis. Through a tenacity-driven management style that prioritizes technological competitiveness over short-term results, he completed an automotive electronics value chain across all affiliates. Koo established a "One LG" strategy where affiliates work as a single team. This structure allows the group to provide integrated solutions to automakers by organically linking infotainment, automotive organic light-emitting diodes (OLED), autonomous driving sensors, and batteries. This restructuring led to the B2B revenue share of the group’s major affiliates exceeding 67% in 2025, a 4 percentage point increase from the previous year. Two-thirds of the group's revenue is now generated from B2B, indicating a rapid shift of the business focus toward future mobility. The order backlog of LG Electronics’ Vehicle Component Solutions (VS) Business Division has consistently remained around 100 trillion won, emerging as a core profit source for the group. It leads the infotainment market by securing global automakers, including European premium brands, as customers. LG Electronics plans to solidify its position as a key partner in the mobility ecosystem, centered on automotive electronics. "Based on a stable order backlog, LG Electronics' automotive electronics business is expected to exceed 12 trillion won in revenue this year," an industry official said. "It will grow into a new cash cow following home appliances." LG Display and LG Innotek have secured original technologies in the fields of automotive OLED and autonomous driving sensing parts, respectively. They have established a structure that provides both hardware and software to 10 global premium brands. A 2-trillion-won battery supply contract between LG Energy Solution and Mercedes-Benz in December 2025 is considered one of the greatest achievements of the "One LG" strategy. Additionally, LG Innotek decided on April 20 to supply its "automotive Wi-Fi 7 communication module" using advanced Wi-Fi technology to a global automaker via an Audio/Video/Navigation (AVN) system produced by a German automotive parts customer. [email protected]