With the aim of boosting its chip business for electric cars, the South Korean technology giant Samsung Electronics Co Ltd is in talks to acquire a stake in Chinese automaker BYD, the electronics giant announced very recently through a statement.

Seeking a new growth engine as the global smartphone industry is slowing, a team to develop automotive-related businesses was created in in December by Samsung Electronics, the world’s top maker of smartphones and memory chips.

As the race to develop electric, self-driving, internet-connected vehicles has created demand for more electronics components and software, a large number of automakers and technology companies have formed a series of partnerships in recent years.

“The latest investment aims at strengthening electric vehicle parts and smartphone parts businesses for the two companies. We plan to discuss cooperation in various businesses going forward,” Samsung said in a statement.

BYD specializes in electric vehicles and is backed by Warren Buffett’s Berkshire Hathaway Inc.  Important issues like how big a holding it would take in BYD and how much it would spend to buy the stake has not yet been finalized by Samsung, the South Korean company added in the statement.

Samsung agreed to buy new shares worth 3 billion yuan ($449 million) in BYD, reported the Korea Economic Daily earlier on Friday. If this deal goes through, Samsung would gain a 4 percent stake in the automaker.

While BYD did not disclose the amount of its investment as the offering had yet to close, it however confirmed in a stock exchange filing that Samsung Electronics had participated in their non-public issuance. However the news report as published in the Korea Economic Daily that Samsung Electronics would buy a 4 percent stake in the company were denied by the automaker.

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, the Korean company’s shares firmed 1.2 percent, versus the broader market’s 0.3 percent rise.

Riding on the hopes that it might be in line to supply electric vehicle batteries to BYD, the shares in the electronics firm’s affiliate Samsung SDI jumped more than 8 percent in early trading in Seoul.

However battery supply was not a part of the BYD tie-up, confirmed Samsung. Samsung SDI shares trimmed gains and were traded flat as of 0500 GMT.

(Adapted from Reuters)