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November 14, 2016

Samsung bets on connected cars with $8 billion Harman acquisition

Samsung's latest buy HARMAN provides connected car solutions.

By Alexander Sword

Samsung is entering the connected car arena with an $8 billion acquisition of HARMAN as sales in its traditional devices markets slow.

The all-cash acquisition of the Tier 1 automotive supplier, which designs and integrates in-vehicle technologies, will give Samsung a strong foothold in the automotive electronics market. Samsung has identified this as a strategic priority and expects it to grow to over $100 billion by 2025.

Samsung says that it will also be able to use HARMAN’s industry relationships and gain access to its 8,000 software designers and engineers.

Samsung also says that HARMAN will benefit from Samsung’s expertise in mobility, semiconductors, user experience, displays and from its distribution channels.

The four main areas expected to be addressed by the combined business are automotive technologies such as infotainment, cyber security and updates and audio, professional and connected services.

Oh-Hyun Kwon, Vice Chairman and Chief Executive Officer of Samsung Electronics, said: “As a Tier 1 automotive supplier with deep customer relationships, strong brands, leading technology and a recognized portfolio of best-in-class products, HARMAN immediately establishes a strong foundation for Samsung to grow our automotive platform.

“HARMAN’s sustained track record of rapid growth fuelled by technology leadership and an unmatched automotive order pipeline reflects its commitment to innovation and customers.”

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Samsung is one of several device-makers that are investing in addressing the connected car market. Google and Apple both have applications that allow smartphone apps for Android and iOS respectively to be used with a vehicle.

The market has been significantly disrupted by the arrival of Elon Musk’s electric car brand Tesla, with established players such as Ford and Jaguar also investing heavily in developing car software and mobility products.

According to PwC, digital and connected services could be worth 24 percent of automotive industry revenue and 36 percent of profits by 2020.

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