South Korean technology giant Samsung Electronics Co Ltd on Friday said it is in talks to acquire a stake in Chinese automaker BYD to boost its chip business for electric cars.
In December, Samsung Electronics, the world's top maker of smartphones and memory chips, created a team to develop automotive-related businesses, seeking a new growth engine as the global smartphone industry is slowing.
Automakers and technology companies have formed a series of partnerships in recent years as the race to develop electric, self-driving, internet-connected vehicles has created demand for more electronics components and software.
"The latest investment aims at strengthening electric vehicle parts and smartphone parts businesses for the two companies," Samsung said in a statement.
"We plan to discuss cooperation in various businesses going forward."
Samsung said it has not finalised how much it would spend to buy the stake, nor how big a holding it would take in BYD, which specializes in electric vehicles and is backed by Warren Buffett's Berkshire Hathaway Inc.
The Korea Economic Daily reported earlier on Friday that Samsung agreed to buy new shares worth 3 billion yuan ($449 million) in BYD, which would give Samsung a 4 percent stake in the automaker.
BYD confirmed in a stock exchange filing that Samsung Electronics had participated in their non-public issuance, but did not disclose the amount of its investment as the offering had yet to close. The automaker, however, denied Samsung Electronics would buy a 4 percent stake as reported in the Korea Economic Daily.
The Korean company's shares firmed 1.2 percent, versus the broader market's 0.3 percent rise, hitting their highest levels in more than three years and extending gains posted since it said last week it expected a 17.4 percent rise in quarterly profit.
Shares in the electronics firm's affiliate Samsung SDI jumped more than 8 percent in early trading in Seoul on hopes that it might be in line to supply electric vehicle batteries to BYD.
But Samsung denied that battery supply was part of the BYD tie-up. Samsung SDI shares trimmed gains and were traded flat as of 0500 GMT.