LG Elec to start automotive cybersecurity business

South Korea’s LG Electronics Inc. is about to start automotive security business, expanding its car electronics technology portfolio by taking over an Israeli cybersecurity company with up to $110 million investment.

LG’s board of director approved the acquisition of Cybellum in a deal to buy 63.9% in the vehicle cybersecurity risk assessment solution provider for $89.5 million, according to LG on Sept. 23. The South Korean electronics giant plans to buy more stakes.

In addition, LG committed to a simple agreement for future equity (SAFE) to invest $20 million more in Cybellum upon conclusion of the trading process in the fourth quarter, LG said in a statement.

“LG will take Cybellum’s management right with an expected total investment of around $110 million,” said an LG official.

Threats on automotive cybersecurity are increasing when the global auto industry is moving to the connected car era. Remote control of brakes, locks, and navigation systems through hacking can put the life of the driver at risk.

LG’s acquisition is to aim at the connected car market linked with information and communication technology (ICT), industry sources said. LG is looking for cooperation with global partners such as Apple Inc., which is developing an autonomous electric vehicle. Founded in 2016 in Tel Aviv, Cybellum provides solutions to identify vulnerabilities related to automotive cybersecurity.

“This latest deal will further strengthen LG’s solid foundation in cybersecurity, enabling us to be even more prepared for the era of connected cars,” said Kim Jin-yong, president of the LG Electronics Vehicle component Solutions Company.

TOUGHER REGULATIONS

Authorities across the globe are stepping up regulations on vehicle cybersecurity with connected car hacking cases increasing. The United Nations Economic Commission for Europe (UNECE) has been seeking international standards for such regulations since 2016. In June 2020, it required to apply systems against cyberattack to automobiles. All new cars must get an approval from the UNECE from July 2022.

Cybellum provides technology to check whether electronics components’ standards meet regulations in each country. Its technology allows users to inspect various software and parts in a vehicle and check if they meet government regulations and consumer requirements.

“The takeover is a pre-emptive step to deal with tougher global regulations on cybersecurity. We expect to become an innovative partner to the auto industry,” said another LG official.

The automotive cybersecurity industry has great growth potential with the global market expected to grow to $1.8 billion in 2025 from $100 million this year, according to Boston Consulting Group.

EXPANDING AUTOMOTIVE ELECTRONICS BUSINESS

LG has been expanding its business in the automotive electronics sector. In 2018, it acquired Austria’s ZKW Group, a leading player in the automotive lighting market.

In July, LG launched a joint venture with Magna International, the world’s third largest auto supplier, to create LG Magna e-Powertrain Co.

Earlier this month, LG obtained an official qualification to check how much the functional stability of automobile software meets international standards from Korea Laboratory Accreditation Scheme (KOLAS) under Korean Agency for Technology and Standards.

Write to Sin-Young Park at nyusos@hankyung.com
Jongwoo Cheon edited this article.