November 22, 2024

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[THE INVESTOR] Samsung Electronics is speculated to be in talks with Fiat Chrysler Automobiles to acquire the carmaker’s auto parts maker Magneti Marelli as the tech giant pushes to reenter the auto business.

According to news reports, the deal could be worth more than US$3 billion, the biggest-ever acquisition for Samsung outside its home turf. 

The rumors involving Fiat, the seventh-largest carmaker globally, comes after Samsung announced a 1.92 percent stake purchase, worth 3 billion yuan (US$450 million), in China’s BYD, the world’s largest electric car manufacturer, in July. 

"Following the recent investment in BYD, a partnership with Fiat would speed up Samsung's plans to secure a firm footing in the car market, especially since it would not be easy for Samsung to nurture the business on its own given the high entry barriers of the automotive industry," said Lee Seung-woo, analyst at IBK Investment and Securities.

Further fueling the speculation, Samsung Electronics Vice Chairman Lee Jae-yong, the group’s heir apparent, has been a director of Fiat Chrysler’s controlling shareholder Exor SpA since 2012. 

Samsung is said to be particularly interested in Magneti Marelli’s lighting, in-car entertainment and telematics technologies. Its key affiliates such as Samsung Display and Samsung Electro-Mechanics have already partnered with Fiat on automotive displays and camera sensors.

If the deal is finalized, Samsung could secure stable orders from Fiat-owned brands such as Fiat, Chrysler and Jeep in the mass market to luxury brands such as Maserati and Alfa Romeo. 

“We do not respond to market rumors,” said a Samsung spokesperson, denying to further elaborate on the issue. 


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But some critics said it seemed unlikely for Samsung to partner with a specific carmaker at a time when diversifying clients is crucial for its nascent car parts business.

“Samsung has continued supply talks with top carmakers. But Fiat, despite its size, is not a potent market leader in terms of technological innovation,” said an industry source on condition of anonymity.

“Samsung is more likely to acquire some divisions of Magneti Marelli, rather than the whole operations.”

Compared to its cross-town rival LG Electronics, Samsung is a latecomer in the car market. It set up a separate auto parts business division in December last year.

The company is currently seeking to expand its presence beyond batteries. Samsung’s battery-making unit Samsung SDI is extending supplies to global carmakers, being the sole supplier to BMW’s hybrid and electric models.

Other than batteries, Samsung is betting big on displays, chips and camera sensors for futuristic vehicles, including self-driving cars.

By Lee Ji-yoon (jylee@heraldcorp.com)