South Korea’s tech giant Samsung Electronics Co. that has been seeking to branch out beyond smartphone has joined the top-tier supplier club of the country’s largest car maker Hyundai Motor Co. following its $8 billion deal to buy United States-based leading automotive component manufacturer Harman International Industries Inc.

The global smartphone leader on Monday announced that it has agreed to pay $8 billion to take over Harman, world’s leading car audio system supplier that is also rapidly expanding its presence in connected car solutions. Harman accounts for the highest 41 percent in the global car audio system market, and its major customers include Hyundai Motor and Kia Motors Corp. in Korea, as well as General Motors Co. and Fiat Chrysler abroad. Hyundai Motor’s Genesis EQ900 sedan is currently equipped with Lexicon audio system, one of Harman’s major premium line-ups.

Hyundai Motor has been also using parts and components manufactured by Samsung Electronics and its affiliates, but it has not directly purchased such parts from Samsung Electronics. Hyundai Motor has been buying finished auto parts that use Samsung Electronics’ semiconductors or panels from other auto parts and component suppliers.

But the Samsung Electronics’ largest-ever buyout deal has allowed the electronics tycoon, which is still a fledgling company in the automotive electronics sector, to leapfrog into the league of the first-tier auto parts suppliers of Hyundai Motor.

Emerging as a major auto parts supplier, Samsung Electronics is also now put in direct competition with its long-time rival LG Electronics Inc. not only in consumer electronics but also in the automotive electronics market.

LG Electronics set up a vehicle components division in 2013 to further expand its presence in the rapidly growing auto electronics industry, and ever since, it has rapidly built up its reputation in the market by winning orders General Motors Co. and Volkswagen AG. to supply advanced component parts. It has remained top in supplying telematics solutions, a core technology in self-driving vehicles, since 2013, cementing its position ahead of Harman.

By Lee Seung-hoon

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