​Samsung will not make cars following Harman deal, execs say

Samsung will not make automobiles and stay a tier-1 components supplier after its $8 billion purchase of Harman, senior executives of both companies stressed.

Samsung Electronics will not be making automobiles and will stay a tier-1 components supplier for finished car makers going forward following its $8 billion deal to purchase parts giant Harman International Industries, senior executives of both companies have said.

Harman CEO Dinesh Paliwal visited Samsung's office in Seoul on Monday to meet with senior executives and Samsung Electronics vice chairman Lee Jae-yong following the deal announced earlier this month.

"Our clients will be car makers. Our cooperation with Harman itself I think shows that we will not be making cars," said Park Jong-hwan, head of Samsung's automotive business, in a media briefing.

Paliwal said he met clients -- including Korean car maker Hyundai -- in the past week, who have shown positive reactions to the mega-deal and expected synergy from the cooperation.

Park said he stressed to clients that Samsung's purchase of Harman was so to ultimately become a tier-1 supplier in the smart car age to come.

"The PC age has passed, and in the next 10 years our component business will rely on smart cars. This includes batteries and memory chips," said Park. "Samsung Electronics will utilize its components business, while filling the gaps with Harman's portfolio."

The 70-year-old Harman owns a premium audio systems brand that is used by car makers worldwide. Samsung plans to adapt these technologies into its consumer products such as smartphones and home appliances -- though this will happen in 2018 at the earliest after the deal is completed, executives said.

Samsung makes displays, batteries, and semiconductors, which it is aiming to supply more of to global car makers. Harman has the technology in audio and software which Samsung lacks, allowing comprehensive supply for smart car parts.