As Samsung is constantly looking for new revenue streams, the South Korean tech giant has reportedly started putting a larger focus on automotive electronics and Internet of Things (IoT) technology earlier this year. Today, the Seoul-based conglomerate announced another step in that endeavor as it officially confirmed an $8 billion acquisition of a connected car system manufacturer Harman International Industries.
While not exclusively focused on the auto industry, most of Harman’s sales in the last 12 months have been related to connected car technology, and that’s precisely why Samsung bought the Stamford-based company. As Samsung Electronics Chief Executive Officer Oh-Hyun Kwon put it, this acquisition of Harman is “a natural extension” of Samsung’s automotive strategy. According to Samsung’s internal research, the automotive electronics industry will be worth over $100 billion by 2025. In that context, the purchase of Harman certainly makes sense given how the US tech company is currently servicing around 30 million vehicles. In addition to connected car technologies, Harman also develops audio systems, large-scale entertainment solutions for performance facilities, and general-purpose IoT software. Samsung labeled all of these businesses as potential growth avenues, though the South Korean tech giant noted that its initial focus will be placed on integrating Harman’s connected car solutions into its existing products and services. Samsung’s Automotive Electronics Business Team will be closely cooperating with Harman’s management in order to realize that strategy as efficiently as possible.
Of course, the acquisition is yet to be approved by Harman’s shareholders and US regulators, but Samsung believes the procedure is just a formality because it already confirmed that Harman will continue to operate the way it has so far. In other words, despite purchasing the company primarily for its connected car solutions, Samsung has no plans to shut down any of its other services like audio systems and enterprise automation. The South Korean tech giant also confirmed that it’s planning to keep all of Harman’s existing workforce and infrastructure. Given these terms, Samsung is hoping that the transaction will officially be completed by mid-2017. Samsung and Harman will also host a conference call in a few hours during which they’ll further explain this acquisition which has been unanimously approved by both companies’ boards.