Electronic Part Manufacturers Avoid Unfavorable Factors from Smartphone Markets through Automotive Markets

Feb 28, 2017

Electronic part industries are having successful performance by going after automotive markets. Performance of companies that had had successful season in 2016 from automotive electronic part markets has improved significantly. These companies even avoided unfavorable factors such as stagnant growth of Smartphone markets and discontinuation of major model. Primary task for these industries is to go after demands for automotive electronic parts.
AMOTECH (CEO Kim Byeong-kyu) made an announcement on the 27th that its operating profits in 2016 increased by 34.6% compared to 2015. In 2016, AMOTECH made $262 million (296 billion KRW) and $25.6 million (29.0 billion KRW) in sales and operating profits respectively. Although its sales decreased by 5.7% compared to 2015, its operating profits increased greatly from the year before.
This performance is greatly contrasted to performance of other part manufacturers. Major part manufacturers in South Korea were hugely affected from discontinuation of Galaxy Note 7 in 2016 and their operating profits either converted to operating losses or decreased by 30 to 90%. As level of dependence on Samsung Electronics’ sales gotten higher, effects from discontinuation also gotten higher.
Although AMOTECH is a major partner of Samsung Electronics, it was able to avoid direct effects from discontinuation of Galaxy Note 7. Although it was unavoidable for AMOTECH to avoid effects from discontinuation of Galaxy Note 7 completely as it supplied major materials and components including wireless charging and antenna modules to Samsung Electronics for Galaxy Note 7, its yearly performance was actually improved due to positive performance from its automotive part businesses.
AMOTECH is supplying ceramic chips, small motors, and antenna parts to automotive markets and is also supplying products that used to be for Smartphone markets. It has been pioneering markets according to increase in demands for various electronic components such as telematics, GPS, and electronic control devices.
“Although we have diverse customers, products, and sales, our operating profits in 2016 improved due to increase in sales from products that are related to electronic equipment.” said a representative for AMOTECH. “Cars are rapidly technologized informationally and many IT companies are starting to actively go after automotive markets.”
Automotive part business for LG Innotec, which was able to prevent its performance from going downhill in 2016, is also growing. In spite of LG Electronics’ slump and front-end industries’ slump, it was able to avoid huge slump. It achieved its greatest quarterly performance in 4th quarter of 2016 and was able to recover LG Group’s performance along with LG Display.
It is seen that its dual-camera modules that were delivered to Apple and its automotive part business that is growing continuously have played huge roles in LG Innotec’s performance. LG Innotec made about $731 million (826.7 billion KRW) in sales from its automotive part business. Amount of sales in 2016 increased by 27.3% compared to 2015 when it made $574 million (649.6 billion KRW). Quarterly sales of this business is surpassing $177 million (200 billion KRW) starting from 2nd quarter of 2016 and its quarterly sales of this business was in the middle-end of later-end of 100 billion KRW ($88.1 million) until 2015.
While its LED and board material businesses are having losses, its automotive part business has risen as the company’s important driving force. Amount of new contracts for its automotive part business in 2016 reached $2.30 billion (2.60 trillion KRW). This amount is equivalent to 14.4% of company’s entire sales and it increased by 3.8% from 2015 when it was 10.6%.
“While growth of Smartphone markets is slowing down, new demands for automotive electronic parts are growing consistently.” said a representative for this industry. “Automotive markets are appealing enough for South Korea’s part manufacturers that need to find new way outs.”
Staff Reporter Song, Junyoung | songjy@etnews.com

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