Samsung Electronics is planning to purchase Harman International Industries. The acquisition will put them a step ahead in the autonomous-vehicle field. Samsung’s $8 billion bid for Harman is expected to be final in mid-2017.
The deal marks Samsung’s plan to raise their industry presence. They will join technology companies like Google and Apple looking to profit from the in-car technology market. It will also allow access to customer-facing technology as the supplier continues to grow.
Harman CEO Dinesh Paliwal says that this will be a huge differentiation for the company.
As the auto industry begins moving toward autonomous vehicles, in-car technology is becoming increasingly profitable. Elliot Garbus, General Director of the Intel Transportation Division, says the in-car industry may be worth up to $5 billion.
Around 65% of Harman’s $7bn in deals for the year were from its auto segment. It has an extra $24bn in upcoming orders from auto organizations. Under the present terms, Harman will stay as a stand-alone operation.
Like A Glove
Samsung was looking into a deal with Fiat Chrysler- Magneti Marelli in August. However, experts say the Harman merger fits better with the electronics giant.
David Leiker, an expert at Baird Equity Research, says these companies go together like a glove and a hand.
With unlimited access to Samsung’s audio technology and display, Harman has an advantage in creating cockpit systems, all while competitors will continue relying on standard component providers.
An analyst at IHS Automotive, Mark Boyadjis, says they can now offer OEM’s a complete platform and entire cockpit design, which will put Harman farther ahead than they already are.
The supplier will keep 10% of the technology provider market revenue in 2022 and expects to grow under Samsung all the more.
The association with Samsung also puts Harman closer to the consumer, an essential relationship as car organizations begin offering mobility services in addition to auto parts.
With Harman on board, Samsung will also have entry to the car head unit. Google and Apple have officially made advances with Android Auto and Apple CarPlay in the unit. It also can speed up arrangements to offer 5G LTE connectivity, allowing faster data between the vehicle and the cloud. Samsung President Young Sohn says the organization plans to start trials of the 5G LTE in 2018 and reveal the innovation in 2020.
Auto deals in 2015 and 2016 were at $74.4bn total value in comparison to the average of $17.7bn annually. 29 of those arrangements were esteemed at $500 at least million and had fundamentally included car innovation providers.
Boyadjis says there were also billions of dollars gained in this segment over the past 2 years.
The deal between Harman and Samsung may also start more investment in technology suppliers. Mostly from companies similar to Samsung looking to build their industry presence.