Making cars a ‘remote data center’

Samsung executive visits Israel to observe firm’s investments

MARCH 6, 2017 00:36

SAMSUNG PRESIDENT Young Sohn addresses the company’s summit conference in Tel Aviv. (photo credit: EREZ CHARODI/OSIM TZILUM) — SAMSUNG PRESIDENT Young Sohn addresses the company’s summit conference in Tel Aviv.

(photo credit: EREZ CHARODI/OSIM TZILUM)

As Samsung makes the leap from cellphones and consumer electronics into the global automotive industry, the information technology giant will be staying away from the steering wheel.

“You’ll never see a Samsung car,” Young Sohn, president and chief strategy officer for Samsung Electronics, told Israeli journalists at a Herzliya press conference on Sunday.

“We will not build cars,” he said. “We are very interested in applying our technology to making smarter cars.”

While Samsung is eager to make its mark on the automotive sector, the company has no intention of seeing its name on the car itself. Instead, the firm is focusing on empowering original equipment manufacturers (OEMs) with the ability to rapidly deploy connected car technologies and services – focusing on electrification, connectivity and safety, Sohn said.

“The content is increasing tremendously,” he said. “There is no reason why we have to do the metal-bending. Why not focus on content? “Think about your Netflix in your living room, except it’s a moving car,” he added. “I think ‘Samsung Inside’ is a good expectation. Samsung Inside, via Harman.”

Sohn was referring to Samsung’s recent $8.1 billion acquisition of Harman International Industries, which specializes in vehicle audio systems and connectivity technologies, on November 14. While in Israel this week on his semiannual trip, Sohn is spending time not only at Samsung’s Israeli offices, but also at Harman’s Israel branch, as well as at a variety of start-ups receiving Samsung investments.

“It will get us into an industry where we are not a player,” he said about the Harman deal.

“Harman had an iconic audio brand.”

By combining Harman’s audio with Samsung’s video, the partnership has the potential to create a seamless combined audio-video experience, he explained. To date, Harman has acquired three Israeli startups – iOnRoad, Redbend and TowerSec – all of which Young said he visited on Sunday morning.

“It’s an example of how we innovate and create value together,” Sohn said.

With $194b. in revenue, Samsung is the second-largest IT company in the world and the largest investor in IT research and development, at $12.1b.

Although the company is based in South Korea, seven out of 10 of the company’s 325,000 employees are located abroad, according to Sohn.

Samsung has been operating in Israel for 16 years and is the leading tech investor in the country through Samsung Catalyst Fund, Samsung NEXT and Samsung Ventures, Sohn said. The company has four sites on the ground and has made 23 venture investments here since 2013.

As Sohn visits Samsung and Harman sites in Israel this week, he also plans to look for potential acquisitions and investments that could help the company achieve its goals of making cars smarter.

As opposed to Silicon Valley, where innovation tends to be more “app-driven,” Sohn described Israel’s start-up sector as “more tech driven,” stressing that Samsung likes the country’s “fundamental technology.”

“We are also a technology company that continues to push the envelope of physics,” he said.

About half of Samsung’s investments are in Silicon Valley companies, while 25% are in Israel and 25% are in the rest of the world, said Shankar Chandran, managing director of the Samsung Catalyst Fund.

“That’s why we’re here a lot,” Chandran said. “Israel is one of the most important places for us. Some of the most disruptive ideas from a physics perspective and a core tech perspective happen here.”

Out of Samsung’s investments in nine automotive companies last year, three were in Israel, Chandran said. In the company’s four lines of business – mobile phones, consumer electronics, device solutions and now the automotive sector – Israeli innovation is able to offer important core capabilities, like vision systems, radars and defense technologies, he said.