Samsung to purchase Harman for $8 billion

by Mike Elliot | Wednesday, Nov 16, 2016 | 142 views

Samsung Electronics has decided to purchase Harman, the US automotive technology manufacturer for $8 billion. This is the biggest deal ever made by the South Korean electronics giant. The company stated that it would offer $112 per share in Cash for Harman International Industries Inc. which is an audio pioneer that has managed to push in the automotive world aggressively.

Samsung has no plans to make cars

Samsung is more interested in automotive technology and has no plans to make cars. With the broader shift towards driverless vehicles and emergence of semiconductors as a promising growth area, Samsung is keen in exploring the technology that can make a difference in the segment. Harman is popular for its audio hears. Samsung’s move into automotive technology comes amid concerns of executives that the company is too reliant on smartphone segment which has been the key driver of growth of the company in the recent years. These concerns were further compounded by its decision to scrap the overheating Note 7 devices which resulted in loss of $5billion.

Automakers dependent on technology

They are well aware of the fact that the carmakers are dependent on chips that are developed on complex programming codes. The company provides complex and costly lithium-ion batteries to Nissan Motor Co. It is the world’s largest producer of memory chips which are consumed in almost every electronic product. Samsung is as well a leading manufacturer of display panels used in cars. The display panels accounted for 84 per cent of the operating profits of the company.
The deal with Harman makes Samsung a major player in car technology. This can prove to be a big play for Samsung strategic wise. It will receive a significant and instant head-start in monetizing the automotive segment having Harman as a subsidiary. This is a rare big deal cracked by Samsung. The company had previously launched Samsun g Motors with backing from Nissan. It was later forced to sell the company to Renault during 1998 after financial crisis hit Asia.

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