(iTers News) -Samsung Electronics is in negotiations with of Fiat Chrysler Automobile, or FCA to acquire the Italian car maker’s automotive parts and components subsidiary Magneti Marelli in a deal estimated to be worth US$3 billion or approximately 3.354 trillion won, according to Bloomberg newswire service.

The news comes one month after Samsung Electronics invest 510 billion won to buy  unspecified stakes in Chinese EV, or electric vehicle maker BYD, as the world’s largest memory chip and smart phone maker is looking to automotive parts and components business as a next wave of cash crop.

Samsung Electronics neither confirm nor deny the Bloomberg report.

Rumors have been swirling in months that Samsung Electronics will remake the factory space in Daegu City, once  a home to its mobile phone production, as a new production  hub for automotive parts and components business. Samsung had relocated its production facility for mobile phones to its Vietnam manufacturing cluster leaving the space  empty.

Once the deal hit, it would mark the single largest investment ever by Samsung Electronics to acquire a foreign company.

Samsung Electronics has been mustering all of its silicon assets and other car-related parts and components to bring them together under one single roof of its newly created automotive parts and components module business units in what ‘s called as a synergy effect.

They include application processors, CMOS image sensors, memory chips, wireless chips, secondary batteries, and LCD displays - all key building blocks for in-vehicle infotainment systems and ADAS, or advanced driver license system.

Spearheading the newly formed business task force team is vice chairman Kwon Oh Hyun, who is in charge of Samsung’s device solution business that includes semiconductor chips and display panels.

As digitalization of cars are gaining speed, cars are increasingly becoming smarter and smarter, coming awash in tons of intelligent silicon contents and other electronics parts.
NXP Connected Car



Coming built with radar sensors and CMOS camera systems, for example, high-end premium cars of today are seeing and feeling around to detect movements of other cars and pedestrians. To the surprise of car drivers, V2X, or vehicle to vehicle or infrastructures communications systems are being tested in Europe, Japan and Singapore for the immediate commercial use. Once the system approved, it will enable car drivers to communicate with other cars ahead or traffic lights system at the intersection to make sure how close they approach each other and what lay ahead on the road. Cars also can talk with on-road traffic monitor systems and traffic light systems to have intelligence about approaching cars at the intersection and unexpected obstacles on the road.

According to some estimates, about 8,000 silicon chips are now being built into a car on average. As car makers and IT giants are now working together to make cars intelligent enough to drive for themselves on their own intelligence in what’s called as a self-driving cars, more and more of silicon contents will be put inside the vehicles. The rapid penetration of EVs opens up new market opportunities for silicon chip makers, too, as the vast majority part of the car will be digitalized to save weight and so consume less electricity. For example, the digitalization of car dashboard systems, side mirror, instrumental clusters, and in-vehicle networking can significantly save car weights. According to market research firm Strategy Analytics, the share of electronics parts as a percentage of total BOM, or bill of material for car zoom stay around 35% now, but by 2020, will zoom past 50% on average

Samsung aims to cash in on the car electrification in its quest to carve out a new growth engine after memory chips.

Yet, it is not clear whether Samsung will remake itself as an automotive chip supplier, or an automotive electronics module system makers like Continental and Delphi Automotive.

As it is a chip maker, the diversification into the automotive chip business is a natural course to take, but the entry into module business will risk causing a strong backlash from global top-tier module makers, who think of Samsung’s advance as a great threat to their businesses and then consider stopping purchasing Samsung’s silicon contents citing a reason conflicts of interests

This is a serious conundrum facing Samsung Electronics.

Automotive electronics module businesses are not lucrative enough to sustain a company size like Samsung’s. The business value chain is very tightly interwoven with car makers as module makers are operating in the way that they are under the roof and aegis of car makers. The inter-dependences between car makers and module makers have created many sub-ecosystems inside the whole ecosystem. That makes it difficult for a company like Samsung’s size to achieve economies of scale.

There is a long way to go until Samsung make its name in the car automotive chip businesses. Compared with other top tier automotive chip makers like NXP, TI, and Infineon, Samsung’s chip business lacks in scale and technology portfolios.

That’s a business where other legacy chip assets than CPUs and memory chips prevail, including embedded MCUs, logics, power management chips, analogs and mixed signals, in-vehicle connectivity chips . Especially, that’s the market where car makers as well as electronic module system makers are preferring one-stop shopping services. Samsung pales in comparison with other automotive chip makers in scale and portfolio.

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