Sam­sung buys auto elec­tron­ics com­pany

Jamaica Gleaner - - BUSINESS - – AP

SAM­SUNG ELEC­TRON­ICS’ US$8bil­lion ac­qui­si­tion of the United States auto elec­tron­ics com­pany Har­man will in­stantly trans­form the South Korean tech com­pany into a ma­jor player in the highly com­pet­i­tive and rapidly grow­ing mar­ket for auto in­fo­tain­ment, soft­ware and con­nected-car tech­nol­ogy.

Sam­sung an­nounced on Monday that it would pay US$112 per share in cash for the Stam­ford, Con­necti­cut com­pany. It is Sam­sung’s largest ac­qui­si­tion by far, and it will put the com­pany in a strong po­si­tion as the race to de­velop au­ton­o­mous ve­hi­cles bar­rels for­ward.

Har­man In­ter­na­tional In­dus­tries Inc is al­ready a US$7-bil­lion player in the au­to­mo­tive mar­ket, mea­sured in annual sales. It makes touch screens that con­trol ve­hi­cle func­tions and in­fo­tain­ment sys­tems, and it is dom­i­nant in au­to­mo­tive sound sys­tems with brands such as Har­man Kar­don, JBL, In­fin­ity and Mark Levin­son.

In re­cent years, Har­man has used ac­qui­si­tions to move into over-the-In­ter­net soft­ware up­dates and cy­ber-se­cu­rity.

Har­man com­ple­ments Sam­sung’s work in elec­tronic dis­plays and com­puter pro­ces­sors, and be­cause of its es­tab­lished rep­u­ta­tion in the auto in­dus­try, gives Sam­sung a strong foothold there, said Sam Abuel­samid, se­nior an­a­lyst for Nav­i­gant Re­search.

IN­DE­PEN­DENT SUB­SIDIARY

Sam­sung plans to keep Har­man as an in­de­pen­dent sub­sidiary and re­tain its man­age­ment team, the com­pa­nies said. That al­lows Sam­sung to en­ter the auto busi­ness with a dif­fer­ent and well-es­tab­lished brand, avoid­ing any im­age prob­lems be­cause of the re­cent Sam­sung Galaxy Note 7 cell phone bat­tery fires.

“They’re looking for other rev­enue streams not nec­es­sar­ily as de­pen­dent on con­sumer per­cep­tions,” Abuel­samid said.

So­phis­ti­cated telem­at­ics sys­tems will be in most new cars by 2020 to sup­port over-theIn­ter­net soft­ware up­dates and other func­tions, Abuel­samid said. Since Har­man al­ready sup­plies screens and soft­ware, Sam­sung can get in the door to sell com­puter chips, he said.

The deal also po­si­tions Sam­sung well as car com­put­ers take on more and more driv­ing func­tions while en route to fully au­ton­o­mous cars, Abuel­samid said. Last month, Sam­sung bought ar­ti­fi­cial-in­tel­li­gence firm Viv Labs, founded by cre­ators of Ap­ple’s Siri. It also re­cently bought a cloud-ser­vice com­pany, a mo­bile-pay­ments firm and a con­nected home start-up.

“They’re putting to­gether a lot of the pieces that they could in­te­grate to sup­ply some of these com­pa­nies,” Abuel­samid said.

More than 30 mil­lion cars are al­ready equipped with Har­man com­po­nents, and most of its sales for the year that ended Septem­ber 30 came from au­tore­lated tech­nolo­gies.

“Upon clos­ing, the trans­ac­tion will im­me­di­ately give Sam­sung a sig­nif­i­cant pres­ence in the large and rapidly grow­ing mar­ket for con­nected tech­nolo­gies, par­tic­u­larly au­to­mo­tive elec­tron­ics, which has been a strate­gic pri­or­ity for Sam­sung,” the com­pany said.

Sam­sung is a late­comer to the mar­ket for con­nected cars. In De­cem­ber 2015, the com­pany made its am­bi­tions for the self­driv­ing car sec­tor known by an­nounc­ing that it will cre­ate a busi­ness di­vi­sion to fo­cus on auto sys­tems and com­po­nents for au­ton­o­mous driv­ing.

Sam­sung fol­lows other tech com­pa­nies rush­ing into the au­to­mo­tive space.

LG, one of Sam­sung’s big­gest com­peti­tors, has al­ready ag­gres­sively en­tered the mar­ket, and that may have mo­ti­vated Sam­sung to spend US$8 bil­lion to pro­pel its en­try into the sec­tor, Abuel­samid said. LG, through its LG Chem bat­tery unit, sup­plies bat­ter­ies for Gen­eral Mo­tors elec­tric cars, and through that re­la­tion­ship, LG sold many of other com­po­nents to GM for the Chevro­let Bolt elec­tric car, he said.

Google has al­ready de­vel­oped au­ton­o­mous cars and has been test­ing them for sev­eral years. Google and Ap­ple also are al­ready work­ing with global au­tomak­ers to sup­ply their auto sys­tems, CarPlay and An­droid Auto, to in­te­grate smart­phones into au­to­mo­tive elec­tron­ics.

Upon clos­ing, the trans­ac­tion will im­me­di­ately give Sam­sung a sig­nif­i­cant pres­ence in the large and rapidly grow­ing mar­ket for con­nected tech­nolo­gies ...

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