Samsung and FCA Partnership: Too Little Too Late?

FIAT self driving

Apple and Samsung are fierce competitors in the phone-and-tablet businesses. In the automotive world, Apple is taking the lead by not-so-secretly developing a vehicle, which presumably will be self-driving and electric.

Samsung isn’t developing such a vehicle, but could jump-start its involvement in the auto industry by making a major purchase from Fiat Chrysler Automobiles.

Magneti Marelli is a high-tech parts maker headquartered in Italy. The company has been a subsidiary of Fiat since 1967 but could now be sold to the South Korean tech company for $3 billion.

What does this mean for Samsung’s role in the growing world of autonomous cars?

Samsung has struggled to win contracts for the hardware and software used in the development of autonomous cars. It has managed to secure some battery business, but needs to play some serious catch-up if it wants to be a leader in this fledgling industry.

Buying Magneti Marelli would essentially create a partnership with FCA and give Samsung the foot-in-the-door it needs to be a competitor. If the deal doesn’t work, Samsung could be out of opportunities.

Nvidia, Nippon, and Delphi are emerging as the leaders in the AI, graphics, and sensor fields. LG has partnered with General Motors, Ford is developing Level 4 autonomy, and Tesla has no need for Samsung. Even in its home market, Hyundai is developing its own components for self-driving cars.

Acquiring Magneti Marelli would be a huge boon to Samsung, but the sale wouldn’t put much of a dent in FCA’s debt. Stock pricesclimbed on the news, but Forbes says,

FCA’s debt and profitability pressures, coming under the spotlight as growth in its most important markets weakens, won’t be resolved by a deal of this size. These two ongoing problems also make less likely CEO Sergio Marchionne’s long-term ambition to merge with another mass car manufacturer.

The auto industry is undeniably heading in the direction of fully autonomous vehicles and the leaders in the industry are emerging. Will FCA and Samsung be among them, or is it already too late?

-tgriffith

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