Friday, April 10, 2020
Will Samsung Electronics’s Acquisition of Harman Be Game Changer in Connected Car Market?
Sweeping Through
Will Samsung Electronics’s Acquisition of Harman Be Game Changer in Connected Car Market?
  • By Michael Herh
  • November 17, 2016, 01:45
Share articles

Samsung Electronics’ acquisition of Harman is likely to lead to new alliances of domestic companies engaged in the future car-related business.
Samsung Electronics’ acquisition of Harman is likely to lead to new alliances of domestic companies engaged in the future car-related business.

 

It is forecast that Samsung Electronics’ acquisition of Harman, a US automotive electronics equipment maker, will lead to new alliances of domestic companies engaged in the future car-related business. In particular, it has emerged as a hot issue whether or not Samsung Electronics which became the world's No. 1 player in infotainment systems for automobiles will partner with the Hyundai Motor Group, the world's fifth-largest automobile company. Even though both have been two leading Korean companies but have been lukewarm about forming cooperative relationships.

In Korea, there are three major companies (Samsung Electronics, LG Electronics, and the Hyundai Motor Group) engaging in the future car business such as connected cars. But their main fields are slightly different. After acquiring Harman, Samsung Electronics became the No. 2 player in the infotainment system (navigation, audio and video) with its focus on the acoustic sector after Panasonic. Even though LG Electronics also supplies information systems, the company is leading the telematics market with a market share of 22%. Harman takes second place. LG Electronics has been concentrating on supplying eco-friendly vehicle drive shafts (motors and battery packs) such as supplying 11 kinds of drive-related parts to the GM Bolt Electric Vehicle.

The Hyundai Motor Group is independently developing infotainment systems, connected cars, various drive shaft components, and sensors. In the connected car segment, the business group is working on vehicle networking technology with Cisco. China announced the establishment of a big data center for the development of connected cars. The US is using Alexa, an artificial intelligence personal assistant service of Amazon. Hyundai Mobis is engaged in the infotainment system and telematics business. However, its main focus is on driving machine parts such as the Advanced Driver Assistance Systems (ADASs) which are the foundation for autonomous vehicles.

Hyundai Motor and LG Electronics have been collaborating for a long time. While partnering with Hyundai Mobis, LG Electronics will supply next-generation infotainment systems to Hyundai and Kia cars scheduled for mass production in 2018.

On the other hand, Hyundai Motor and Samsung Electronics do not collaborate, but the atmosphere may change after the acquisition of Harman according to industry watchers. Hyundai and Kia already equipped Harman brands -- Rexcon and JBL -- in their main sound systems. Acoustic systems are a key element of automobiles so Hyundai Motor and Samsung Electronics can naturally form business partnership. “Hyundai Motor may utilize all of Samsung Electronics, LG Electronics, and Hyundai Mobis as parts suppliers to increase its competitiveness,” said a representative of the automobile component industry. “Samsung Electronics will also be able to expand its business by securing a big corporate customer, Hyundai Motor.”

Some experts predict that Samsung Electronics’s takeover of Harman will make it difficult for Samsung Electronics and Hyundai Motor to collaborate. “Samsung Electronics’s takeover of Harman is seen as the advent of a strong competitor in the automotive industry," said a representative of the automotive industry.

Meanwhile, as Samsung acquired Harman and is moving toward pure automotive components, it is said that the Korean electronics giant will additionally take over a chassis manufacturer which develops brakes and steering systems. Considering Samsung Electronics vice chairman Lee’s will to pursue automobile parts business which was shown in the acquisition of Harman, it is forecast that Samsung Electronics may take over one of the world’s four leading auto parts companies -- Germany’s Continental and Bosch, Japan’s Denso and Canada’s Magna.

“If Samsung Electronics acquires BYD in the electric car sector, Harman in the electronic auto parts industry and a chassis manufacturer, its value as an auto parts developer soar," said Dr. Lee Hang-gu at the Korea Institute for Industrial Economics and Trade.