Samsung Electro-Mechanics in talks with Tesla about cameras

Tesla's Model 3 [TESLA KOREA]

Samsung Electro-Mechanics is in talks with Tesla to supply camera modules, according to the Korean electronics component maker on Thursday.

The deal could be worth up to 5 trillion won ($4 billion), according to local media reports.

“The company is in discussions with the client, and we are not allowed to reveal the size or price at the current stage,” the company said in a disclosure.

“Samsung Electro-Mechanics will make a more specific announcement in one month or when details are decided while the company keeps striving to advance camera modules,” it said.

Camera modules are electronic cameras used in everything from smartphones to appliances.

If the deal is concluded in line with the press reports, it would represent the single biggest contract ever won by the component company, which is 23.7 percent owned by Samsung Electronics.

If purchased, the modules will be integrated into Tesla vehicles, including the Model S, Model Y, Model X and Model 3, produced through 2023, according to the reports. Yet-to-be released trucks like the Semi and Cybertruck could be equipped with the modules.

Reports indicate that the camera modules under discussion will have 5 million pixels, an advancement from the previous product with 1 million pixels.

Tesla initiated bidding to choose a main camera module supplier earlier this year, pitting Samsung Electro-Mechanics against LG Innotek, which is currently the top camera module supplier for Tesla vehicles.

The component maker is seeking to widen its product line, which is centered around multilayer ceramic capacitors (MLCC), a type of capacitor designed to store electrical energy in various electronic components and devices.

The company has the second largest share in the MLCC market after Japan’s Murata.

Camera modules and flip-chip ball grid array (FCBGA) packages, a sophisticated type of chip substrate, are considered relatively new areas of focus.

The major client for its camera modules have been Samsung Electronics, as it produces camera modules for budget-line Galaxy phones.

But given that the supply to the related company often generates low profit margins, it has been focused on extending its offering to electric vehicle manufacturers where demand for advanced cameras is on the rise.

“The number of camera modules being used in EV cars keeps increasing,” the company said during a conference call in April.

“In the case of EVs, the demand for high-resolution camera modules is almost twice as much compared to electronic devices,” it said.

BY PARK EUN-JEE [park.eunjee@joongang.co.kr]