LG Electronics CEO Cho Ju-wan (Image courtesy of LG Electronics)
SEOUL, Aug. 2 (Korea Bizwire) – In a promising turn for South Korea’s tech industry, the automotive electronics sector is emerging as a steady performer, even as the broader consumer electronics and semiconductor markets show signs of recovery.
Samsung Electronics and LG Electronics, two of the country’s largest conglomerates, have seen their automotive divisions transform from hidden assets to key profit drivers.
These units have demonstrated resilience in the face of a temporary slowdown in electric vehicle demand, posting strong results in the second quarter of this year.
According to industry sources, Harman, Samsung’s automotive and audio subsidiary, reported sales of 3.62 trillion won and an operating profit of 320 billion won in the second quarter.
This marks a significant increase from the same period last year, when operating profit stood at 250 billion won. The figure also represents a 33.3% jump from the previous quarter’s 240 billion won.
Samsung attributed Harman’s improved performance to increased sales of consumer audio products, particularly in the portable and true wireless stereo (TWS) categories.
Harman, a global leader in digital cockpits and in-vehicle audio systems, boasts an impressive portfolio of brands including JBL, Harman Kardon, Bowers & Wilkins, and Bang & Olufsen, which are featured in many high-end automotive models worldwide.
The tech giant acquired Harman in 2017 for $8 billion, a move that has paid off handsomely. From an initial operating profit of 60 billion won in 2017, Harman’s earnings have soared, reaching 320 billion won in 2019.
After a brief dip to 60 billion won during the COVID-19 pandemic in 2020, the division rebounded strongly, ultimately achieving 1.17 trillion won in operating profit last year.
Notably, Harman’s performance last year nearly matched that of Samsung’s Visual Display (VD) and Digital Appliances (DA) divisions, which posted a combined operating profit of 1.25 trillion won.
In the second quarter of this year, Harman’s 320 billion won operating profit was comparable to the 490 billion won earned by the VD and DA divisions.
Samsung Electronics at CES 2024 (Image courtesy of Samsung Electronics)
LG Electronics has also seen robust growth in its vehicle component solutions division. The unit reported second-quarter sales of 2.69 trillion won, a 1% year-on-year increase, and an operating profit of 81.7 billion won, marking a return to profitability and setting a second-quarter record.
LG’s success in this sector comes from a balanced portfolio that caters to both electric and internal combustion engine vehicles, as well as increased demand for premium in-vehicle infotainment systems.
The division surpassed 10 trillion won in annual sales last year, a milestone achieved just a decade after its establishment.
In the first half of this year alone, LG’s automotive division has already generated an operating profit of 133.7 billion won, surpassing its full-year 2023 profit.
This performance has raised expectations for record-breaking results in the automotive sector this year and has boosted confidence in reaching the company’s goal of 20 trillion won in sales by 2030.
LG’s automotive business is currently structured around three main pillars: infotainment systems (VS Company), electric vehicle powertrains (LG Magna), and automotive lighting systems (ZKW). VS Company now accounts for more than 12% of LG Electronics’ total sales.
Both companies are optimistic about the future of their automotive electronics businesses. Samsung plans to strengthen Harman’s market leadership in consumer audio and expand into new automotive sectors in the latter half of the year.
LG, meanwhile, aims to maintain its order backlog of over 100 trillion won by year-end and expects high single-digit percentage growth compared to last year.
Kim Ju-yong, an executive at LG’s VS Company, stated during a recent conference call that the company expected to maintain an order backlog of over 100 trillion won by the end of the year.
Kevin Lee (kevinlee@koreabizwire.com)
