The biggest smartphone manufacturer in the world has signalled its intention to enter the globally accelerating connected and autonomous car race.
Samsung, which makes the Galaxy phone among others, has agreed to buy Harman, the manufacturer of incar entertainment equipment and other products.
The total value of the purchase is will be $8 billion, according to Samsung, which says Harman will continue operation as a standalone business, albeit as a subsidiary.
Samsung bosses made it clear that the purchase was the company’s way in to the car business, which is currently undergoing some revolutionary changes.
Young Sohn, president of Samsung Electronics, says: “The vehicle of tomorrow will be transformed by smart technology and connectivity in the same way that simple feature phones have become sophisticated smart devices over the past decade.
“We see substantial long-term growth opportunities in the auto technology market as demand for Samsung’s specialized electronic components and solutions continues to grow.
“Working together, we are confident that Harman can become a new kind of Tier 1 provider to the OEMs [original equipment manufacturers] by delivering end-to-end solutions across the connected ecosystem.”
Harman is a well-known in the consumer market, but crucially it is a trusted source of components for the automotive sector – often referred to as “Tier 1” suppliers.
Oh-Hyun Kwon, CEO of Samsung, says: “Harman … is a natural extension of the automotive strategy we have been pursuing for some time.
“As a Tier 1 automotive supplier … Harman immediately establishes a strong foundation for Samsung to grow our automotive platform.”
Dinesh Paliwal, Harman CEO, says: “Samsung is an ideal partner for Harman and this transaction will provide tremendous benefits to our automotive customers and consumers around the world.
“Combining Samsung’s strengths in leading-edge displays, connectivity and processing solutions with Harman’s technology leadership and long-standing customer relationships will enable OEMs to provide new offerings for their customers.
“Partnerships and scale are essential to winning over the long term in automotive as demand for robust connected car and autonomous driving solutions increases at a rapid pace. This transaction will bring Harman and Samsung’s complementary strengths together to accelerate innovation in this space.”
As well as being the world’s largest smartphone maker, Samsung is estimated to be the fourth largest manufacturer of semiconductors for the devices, mainly because of its Exynos processor.
However, the company has little or no presence in the automotive semiconductor market, where NXP holds the leading position as a result of its acquisition of Freescale last year. Now, with NXP itself about to be bought by Qualcomm for $40 billion, the connected and autonomous car race is well and truly on.