Share prices of Samsung Electronics and some of its key affiliates rose Thursday after the company unveiled a plan to develop components for self-driving cars, entering a market eyed by rivals including Apple.
The new automotive component team will “focus on building its competencies in infotainment and autonomous driving vehicles”, the South Korean electronics giant said in its annual business reorganization plan announced Wednesday.
The new unit will be headed by the firm’s executive vice president Park Jong-Hwan who formerly supervised motor and compressor production for Samsung’s home appliances.
Park will coordinate participation by affiliates such as battery maker Samsung SDI and software services provider Samsung SDS.
The share price of Samsung Electro-Mechanics, which produces camera modules and other components for cars, rose more than five percent in mid-morning trade Thursday. Samsung SDI also gained 1.6 percent.
Samsung Electronics — the South’s largest firm by value — was up more than two percent.
Samsung — the world’s top maker of smartphones as well as mobile phones — is also producing semiconductors, displays and home appliances including washing machines and TVs.
The firm has been trying to shore up sagging profits in the saturated handset market by strengthening chip production and expanding into new businesses including healthcare.
Wednesday’s announcement marked the firm’s first foray into the car business since 1995 when it established Samsung Motors. The unit was sold to French carmaker Renault in 1999 as Samsung struggled in the wake of the 1997-98 Asian currency crisis.
Other global electronics firms such as LG, Apple and Panasonic are also eyeing the lucrative market for next-generation vehicles mounted with electronic sensors, displays and Internet connection.
Apple reportedly aims to have an electric car on the road in 2019 while Google and several major carmakers have also been pursuing autonomous vehicle technology.
“It appears that Samsung has established a long-term plan to expand into smart car markets eyed by Google and Apple,” said Lee Ka-Keun, analyst for KB Securities.
The Internet-enabled, next-generation cars are expected to use a wide range of semiconductor components, allowing Samsung room for new growth, he added.