Harman, the global audio and mobility components firm acquired by Samsung Electronics (005930.KS) Chairman Jay Y. Lee, who declared that "Samsung's next growth engine is automotive electronics," has seen its revenue double and operating profit surge roughly 27-fold a decade after the acquisition. Industry observers say management's decision to push through the acquisition despite opposition — including lawsuits from shareholders against the 9 trillion won deal — is now paying off with a forward-looking vision.
According to Samsung Electronics on the 22nd, Harman posted revenue of 15.78 trillion won and operating profit of 1.53 trillion won last year. Compared with 2017, the year after Samsung acquired Harman, when revenue stood at 7.10 trillion won and operating profit at 57.5 billion won, the figures have grown 2.2-fold and approximately 26.6-fold, respectively. Given Harman's recent business expansion, this year's results are expected to grow further.
Harman, famous for its global audio brand JBL, which marks its 80th anniversary this year, was acquired by Samsung Electronics in 2016 for $8 billion (9.4 trillion won at the time). It was the largest overseas M&A deal ever by a Korean company. However, some in the industry called the acquisition an "excessive big deal," while Harman shareholders filed a class-action lawsuit claiming the acquisition price was too low.
Questions particularly arose over why Samsung, a company engaged in semiconductors, smartphones, and home appliances, would buy a U.S. audio firm. Some shareholders also voiced concerns about the price burden and uncertain synergies.
The Harman acquisition reflected Chairman Lee's decision to identify mobility as Samsung Electronics' next growth engine. At the time, Lee picked automobiles as the next-generation growth driver, judging that the car would become the next-generation platform where semiconductors, displays, communications, software, and artificial intelligence converge.
More importantly, Harman was not simply a global audio company. It had competitive capabilities in digital cockpits, car audio, telematics, and in-vehicle connectivity services. Samsung Electronics could combine these with its semiconductors, displays, 5G communications, and mobile device and home appliance ecosystems. The Harman acquisition served as a starting point for broadening Samsung's business landscape from one centered on electronics products to a platform industry connected to mobility.
Chairman Lee's decision is now being validated by results 10 years after the acquisition. Harman posted record earnings last year, and profitability has improved as well. Since being incorporated into Samsung Electronics, Harman has simultaneously strengthened its automotive electronics business, which has a stable order base, and its audio business, which boasts strong brand power. As a result, its operating profit margin now approaches 10%, reaching a meaningful stage in terms of profitability.
More noteworthy is Harman's transformation. While Harman once had a strong image as a premium audio company, today's Harman has transformed into a firm where automotive electronics account for the overwhelming share of its business.
As connected-car functions expand with the growth of the mobility industry, vehicles are evolving beyond places for listening to music into software-based connected spaces. Accordingly, the digital cockpit — which integrates front displays, infotainment systems, in-vehicle audio, communications connectivity, and software updates into a single experience — has emerged as a core automotive electronics domain in the era of future vehicles.
Harman has built an unmatched business portfolio in this field and currently ranks No. 1 globally in digital cockpits and car audio. The market estimates that approximately 65% to 70% of Harman's 2025 revenue will come from automotive electronics-related businesses.
Samsung Electronics is also expanding its presence in connected cars and automotive electronics alongside Harman. As automakers shift toward electric vehicles and software-defined vehicles (SDVs), demand is rising for automotive semiconductors, sensors, infotainment, advanced driver assistance systems, and cloud connectivity technologies.
Samsung Electronics has also boosted the competitiveness of its home appliances, TVs, and smartphones through the Harman acquisition. Since the acquisition, Samsung has applied Harman's long-standing audio technology and brand assets to TVs, mobile devices, and home appliances. JBL is a brand that combines mass appeal and professional expertise, spanning from cinema speakers and concert hall audio to Bluetooth speakers, while AKG, Mark Levinson, and Lexicon are regarded as premium brands in the market.
Through Harman, Samsung Electronics has applied world-class audio technology to TVs, soundbars, smartphones, wireless earphones, and home appliances, raising the quality of its finished products. "Harman's audio technology, accumulated over 80 years, has been applied to Samsung Electronics' TVs, home appliances, and mobile devices, contributing to Samsung's dominance as the world's No. 1 in IT finished products," a Samsung Electronics official said.
Meanwhile, Samsung Electronics is accelerating its mobility business expansion, acquiring the advanced driver assistance systems (ADAS) division of German automotive electronics firm ZF for 1.5 billion euros (approximately 2.6 trillion won) through Harman last December. ZF's ADAS division ranks No. 1 globally in smart camera modules for autonomous driving. Samsung Electronics expects significant synergies between ZF's technology, which has accumulated vast autonomous driving-related data for more than 20 years, and Harman's integrated autonomous driving operational capabilities.