Samsung to buy auto tech company Harman for $8B

By Barry Eitel

SAN FRANCISCO (AA) – Samsung announced Monday it will acquire American automobile technology firm Harman for $8 billion.

The move signals that the South Korean electronics giant is deeply interested in penetrating the market for Internet-connected cars.

Harman has made a name crafting software platforms used in web-linked cars. It has built personal assistants, navigation systems, cybersecurity software and programs aimed at entertainment. The firm has contracts with automobile manufacturers ranging from Fiat to Volkswagen, and said in June that it had a backlog of orders worth $24 billion.

The all-cash deal is the largest acquisition in Samsung’s history, indicating it is muscling into the automobile industry. With Internet-ready cars already rolling off the assembly line and self-driving vehicles likely to become a consumer product within a few years, the automotive electronics industry is expected to be worth more than $100 billion by 2025, Samsung noted in its announcement.

“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,” Young Sohn, president and chief strategy officer at Samsung, said in a statement. “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.”

Amid the news, Harman stock shot up more than 25 percent to $109.73 per share.

“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,” Harman chief executive Dinesh Paliwal said in a statement. “This transaction will bring Harman and Samsung’s complementary strengths together to accelerate innovation in this space.”

Samsung will enter an extremely competitive field, facing off against Silicon Valley rivals like Google and Apple, although the latter claimed last month it was scaling back its car initiative.