Remarkable Growth
Samsung Chairman Lee Jae-yong ambitiously invested 9 trillion won (approximately US$8 billion at the time) in the company Harman, and after a span of about six years Harman has now firmly established itself as a robust and integral part of Samsung Electronics’ business portfolio.
In Samsung Electronics’ performance for the second quarter, Harman’s revenue stood at 3.5 trillion won (US$2.7 billion), while its operating profit amounted to 250 billion won. Compared to the same period in the previous year, Harman’s revenue witnessed substantial growth of 17.4 percent and its operating profit skyrocketed by an impressive 2.5 times. Among Samsung Electronics’ business units, which include home appliances, video displays, networks, device solutions, and displays, Harman was the only one to achieve growth in both revenue and operating profit compared to the same period last year.
Regarding Harman’s notable performance improvements, Samsung Electronics said, “Increased consumer audio demand centered on portable and True Wireless Stereo (TWS) products and cost efficiency measures led to growth in both revenue and profit. Harman has solidified its growth foundation, especially by securing the largest-ever automotive contract.” Harman’s business is divided into two main segments – Automotive and Lifestyle Audio – and both segments are considered to have achieved balanced growth.
Harman marked Samsung Chairman Lee Jae-yong’s first merger and acquisition (M&A) after assuming the role of a registered director in September 2016. As the largest-ever M&A between a domestic company and a foreign corporation, it attracted global attention.
Nevertheless, Harman’s performance in the initial stages did not quite meet the high expectations. Pre-acquisition, Harman’s operating profit amounted to approximately 680 billion won in 2016. However, following Samsung’s acquisition, it experienced a significant drop to 57.4 billion won in 2017. Some in the industry attributed this to Samsung’s DNA not being immediately transferred to Harman, resulting in a slowdown in Harman’s innovation.
Subsequently, Harman displayed gradual growth, with operating profits reaching 160 billion won in 2018 and 320 billion won in 2019. However, the advent of the pandemic in 2020 dealt a severe blow, causing its annual operating profit to plummet back to 60 billion won.
The turning point for Harman arrived in 2021. It accomplished a remarkable feat as the first in the industry to launch a 5G Telematics Control Unit (TCU) and supplied this technology to BMW’s luxury SUV electric car, the iX. Harman secured contracts with prominent global completed vehicle manufacturers in Europe and North America, effectively leveraging the synergies of Samsung Electronics’ display and software capabilities to propel its performance to new heights.
Last year, Harman recorded annual revenue of 13.21 trillion won and operating profit of 880 billion won, surpassing the performance levels before the acquisition. Currently, Harman enjoys a leading position in the digital cockpit and vehicle infotainment domains.
At CES 2023 held earlier this year, Samsung Electronics and Harman jointly unveiled their cutting-edge future mobility solution “Ready Care.” This advanced safety driving support solution detects changes in a driver’s condition and activates relevant functions to ensure optimal driving conditions. It also features the “Cognitive Inattention Detection” function, which comprehensively detects changes in driver attention using newly developed machine learning-based technology and provides customized features for various situations.
This year, Harman is expected to make history again. The financial investment industry anticipates that Harman’s growth momentum in the second half of the year will accelerate, leading to an era of operating profit surpassing 1 trillion won. Various securities firms predict Harman’s annual operating profit to fall within the range of 1 trillion to 1.1 trillion won for the current year.