[FOCUS] Deal to buy Magneti reveals Samsung's automotive ambitions

By Park Sae-jin Posted : August 4, 2016, 15:35 Updated : August 4, 2016, 15:35

[Aju News DB]


Market watchers have reacted positively to a reported bid by South Korean tech giant Samsung Electronics to acquire some or all of the operations of Magneti Marelli, an Italian auto parts maker, from Fiat Chrysler Automobiles NV.

Samsung remained tight-lipped on news reports that it is especially interested in the lighting, in-car entertainment and telematics business of Magneti Marelli which has produced high-tech components.

Samsung has already produced semiconductors and liquid-crystal displays for cars, but experts say the reported deal to buy a stake in Magneti Marelli underlines its latest push in the sector.

In an analytical note, IBK Securities described the reported deal as a timely and "proper strategy" saying it would help Samsung broaden its business scope and move quickly into a new and expanding market with growth potential.

"Mergers and acquisitions are a good strategy to save time," it said, citing Samsung's $451 million investment in Chinese electric carmaker BYD Co. last month as a good example.

The reported deal in Italy would mark Samsung's biggest investment outside South Korea under the leadership of vice chairman J. Y. Lee, the only son of bed-ridden group chief Lee Kun-Hee, 74.

Since Lee Kun-hee was hospitalized in May 2014, his 48-year-old son has carried out a quiet but resolute shakeup of top group executives to bolster his control over the country's largest family-run conglomerate. He has also streamlined the group's structure to pave the way for his debut as group leader.

This year, Samsung Electronics stepped up efforts to develop auto-related technology and software related to components, in-car entertainment and autonomous driving.

TechCruch said that if Samsung acquires Magneti Marelli, it could gain access to supply some of Fiat's luxury brands including Maserati. "An acquisition at this level could be a big shortcut to broader presence in the industry," the online tech industry news provider said, calling it "a safe bet".

Samsung Electronics is the world's largest producer of memory chips, TVs and smartphones, but its car business has been relatively well behind other tech giants like Apple and Google. 

Lee Kun-hee, a luxury car lover, established Samsung Motors in 1994 with technical assistance from Japan's Nissan Motor. But his automotive ambitions were shattered in 1998 when South Korea was hit by Asia's financial meltdown. In 2000, it became a subsidiary to France carmaker Renault.

Aju News Lim Chang-won = cwlim34@ajunews.com
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