More than 30m cars are equipped with Harman’s infotainment, telematics sensors, and connected safety and security features ©Harman
More than 30m cars are equipped with Harman’s infotainment, telematics sensors, and connected safety and security features ©Harman

Samsung enters automotive supply chain with $8bn deal

14 November 2016

An $8bn acquisition is set to turn Samsung into a major supplier to the automotive industry.

The South Korean smartphone manufacturer has entered into a definitive agreement with Harman International Industries, a market-leading maker of connected-car components, to buy the firm for $112 per share in cash.

Samsung expects the connected-automotive market to be worth more than $100bn by 2025 and described the market as a “strategic priority”.

“As a tier one automotive supplier with deep customer relationships, strong brands, leading technology and a recognised portfolio of best-in-class products, Harman immediately establishes a strong foundation for Samsung to grow our automotive platform,” said Oh-Hyun Kwon, vice chairman and CEO of Samsung Electronics.

He added that Harman perfectly complemented Samsung’s range of products and said joining forces was “a natural extension of the automotive strategy we have been pursuing for some time”.

Samsung said more than 30m cars are already equipped with Harman’s infotainment systems, telematics sensors and connected safety and security features including cameras and warning systems.

While 65% of Harman’s revenue over the last 12 months was from automotive related sales, its portfolio also includes premium personal audio products, professional audio and lighting, and cloud computing services. Some of its brands include AKG, JBL, Harman Kardon and Revel.

“The combination of Harman’s brands and audio capabilities and Samsung’s expertise in consumer electronics will deliver enhanced customer benefits and elevate user experiences across Samsung’s complete portfolio of consumer and professional products and systems,” Samsung said in a statement.

Once the deal is finalised, Harman will become a standalone subsidiary of Samsung and retain its own headquarters, workforce and branding.

The deal is expected to be closed by mid 2017, subject to regulatory approval and a vote by Harman shareholders.

The announcement comes after Samsung was forced to cancel sales of its flagship Galaxy Note 7 smartphone after overheating problems caused battery explosions.

After a troubled recall, the company eventually discontinued the handset after the problem persisted on a supposedly fixed model. The Wall Street Journal estimated the saga cost Samsung $5bn in recall costs and lost sales.

Samsung is not the only technology company making inroads into the automotive market. Google has been developing self-driving technology for years, Uber owns a firm that recently made the first self -driving commercial delivery, and as well as Apple’s own in-car infotainment system CarPlay, the firm has reportedly set up a lab to develop self-driving car software.

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