Samsung Electronics promotes its future mobility solutions at its booth during IAA Mobility 2023 in Munich, Germany, Sept. 4. Yonhap By Lee Min-hyung Vehicle components emerge as a savior for Samsung Electronics and LG Electronics amid global economic uncertainties, helping them overcome shrinking customer demand for conventional appliances. According to the recent earnings results of the two tech giants, Samsung’s affiliate Harman generated a record operating profit of 450 billion won ($340 million) in the third quarter thanks to sales expansion driven by its high-end audio systems for luxury vehicles. This is a rise of more than 20 percent from its previous high of 370 billion won recorded in the last quarter of 2022. Harman’s earnings surprise came as a relief for Samsung particularly at this period of global economic uncertainty. Coupled with the unfavorable chip market, Samsung’s third-quarter semiconductor business generated a loss of 3.75 trillion won. The firm also faced double-digit declines in its total sales of 12.21 percent and operating profit of 77.57 percent from the previous year. In 2017, Samsung acquired Harman, in a record-sized takeover worth 9 trillion won. Harman supplies its flagship vehicle audio systems to global carmakers, such as BMW and Volkswagen. Samsung’s strategic decision did not reap fruit in its infancy, as Harman’s operating profit did not display drastic growth for the first few years after the buyout. Harman generated an operating profit of 60 billion won in 2020, but it surged to 600 billion won the following year. The company is forecast to post a record profit of more than 1 trillion won for 2023. Harman’s profit accounts for around 22 percent of that of Samsung Electronics for the first three quarters combined. This is also the case for LG Electronics, the earnings of which were also buoyed by its vehicle component solutions (VS) unit. The division has long suffered deficits since its establishment in 2013. But it started to achieve a major turnaround with an operating profit of 169.6 billion won last year. The VS unit supplies its vehicle infotainment systems to carmakers, such as Mercedes-Benz and Renault. It also sells its automotive lightening systems to major luxury carmakers, including BMW and Porsche. The industry expects its cumulative order backlog to top 100 trillion won by the end of this year. Market analysts expected the vehicle components industry to become a major cash cow for major LG affiliates. “LG Group’s three related arms in the industry — LG Electronics, LG Innotek and LG Display — are forecast to attain whopping sales growth for the next few years,” said Kim Dong-won, an analyst at KB Securities. “Their combined sales in the business will reach 21 trillion won by 2025, up 75 percent in three years.”

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