Is the $8 billion acquisition of Harman Samsung worth it?

Recently, Samsung has become the focus of attention again with an acquisition case. However, this time, what everyone is talking about is no longer the scandal, but Samsung's huge investment of 8 billion US dollars, which is the largest acquisition amount in Samsung's history.

Samsung recently announced that it would acquire automotive parts supplier Harman International Industries (Harman) for $8 billion. After the transaction is completed, Harman will continue to operate as an independent subsidiary of Samsung, retaining the original office space, factory facilities, company headquarters and Harman's most famous audio brand, and keep the current leadership team unchanged. The transaction is expected to be completed in mid-2017.

The Note7 recall has just subsided, and Samsung's losses in the mobile phone market will be difficult to recover until the new product launch next spring. Samsung's choice to shift public attention to the automotive market at this time is also a smart move. However, Samsung, which has always focused more on independent research and development, is willing to spend 8 billion US dollars to acquire Harman. What is the calculation behind this?

It is very simple. Samsung, which has no interest in anything, has set its sights on the rapidly developing automotive industry. In addition to this "historical" acquisition, Samsung has also long been involved in the automotive industry.

In 1994, Lee Kun-hee, then chairman of Samsung Group, founded Samsung Motors and began selling cars in 1998. Unfortunately, the Asian financial crisis soon hit, and Samsung Motors was forced to sell 70% of its shares to Renault.

In April this year, Samsung Electro-Mechanics, a subsidiary of Samsung, announced that it would provide camera modules for Tesla Model 3;

In May this year, Samsung participated in the Series A investment of Singapore’s autonomous driving company nu Tonomy;

In July this year, Samsung's wholly-owned subsidiary Shanghai Samsung Semiconductor Co., Ltd. invested 3 billion yuan to acquire about 2% of BYD's shares, becoming BYD's ninth largest shareholder. The two sides have cooperated in areas such as electric vehicle parts;

In addition, Samsung SDI, a subsidiary of Samsung, also supplies lithium-ion batteries to many well-known automobile manufacturers, including Volkswagen, BMW, Chrysler, etc. At the same time, as the world's largest storage chip manufacturer, Samsung's chips are almost everywhere in all consumer electronic products, including automobiles.

Samsung's acquisition of Harman is based on Harman's strength in the automotive field. Harman has been vigorously entering the automotive field in recent years, and 65% of its total sales last year were related to automobiles. So far, the company's in-car entertainment, network security, telematics and other systems and services have been used in more than 30 million vehicles worldwide. If all these businesses are incorporated into Samsung and combined with Samsung's display, semiconductor, electronic equipment, security solutions and other businesses, Samsung will become a manufacturing giant in the automotive electronics market on par with Google, Apple, and even Tesla and General Motors.

More importantly, just as mobile phones have evolved from being able to simply make calls and send text messages to being "palm-held computers" that integrate multiple functions, cars are also moving towards intelligent networking. Concepts such as car networking and driverless driving have quietly emerged in recent years, and Samsung's acquisition of Harman will greatly help it develop in these two areas .

Counting the pros and cons, Samsung's 8 billion investment was well worth it.

As a winner of Toutiao's Qingyun Plan and Baijiahao's Bai+ Plan, the 2019 Baidu Digital Author of the Year, the Baijiahao's Most Popular Author in the Technology Field, the 2019 Sogou Technology and Culture Author, and the 2021 Baijiahao Quarterly Influential Creator, he has won many awards, including the 2013 Sohu Best Industry Media Person, the 2015 China New Media Entrepreneurship Competition Beijing Third Place, the 2015 Guangmang Experience Award, the 2015 China New Media Entrepreneurship Competition Finals Third Place, and the 2018 Baidu Dynamic Annual Powerful Celebrity.