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March 16, 2023 01:01 AM

Harman Automotive boss reveals secret to keeping pace with new rivals

Developing and testing an infotainment HMI system used to take the supplier up to nine months, now it takes as little as two weeks.

Nick Gibbs
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    Harman Christian Sobottka

    "The classic value chains of OEM, Tier 1, Tier 2 have basically dissolved," Harman automotive boss Christian Sobottka said.

    Speeding up development of parts customers can see and commonalizing elements they can't is the key to staying ahead of tech disruptors in the world of infotainment while also reducing costs, Christian Sobottka, president of the automotive division of Harman International said.

    Harman, a division of Samsung, is remaining competitive against rivals such as chip specialist Qualcomm and Google by approaching its relationship with automakers differently -- encouraging them to enact changes themselves.

    "The classic value chains of OEM, Tier 1, Tier 2 have basically dissolved," Sobottka said in an interview with Automotive News Europe. "Our Tier 1 position is nicely disrupted."

    SUPPLIER SPOTLIGHT NEWSLETTER: Sign up for our monthly newsletter delivering exclusive interviews with executives from leading auto suppliers.

    Suppliers such as Harman have been under threat partly because their relationships with automakers weren't changing fast enough, a fault that sometimes lay with the automaker.

    "It's not only because of testing that the industry moves at the pace it does," he said. "Take the example of an infotainment system. In a classic project approach, we receive a very long and very detailed list of requirements. But 70 to 80 percent of that is not differentiating for the automaker."

    Harman's new approach is to tell the automaker about the specifications of an off-the-shelf system, then focus on the much smaller elements that customers see and that differentiate that brand's cars from those of rivals.

    "This 20 percent we are doing at a much higher speed," he said.

    For example, developing and testing an infotainment human machine interface (HMI) system used to take Harman six to nine months.

    "Now we can do it in two weeks," Sobottka said.

    Increased openness

    Harman, which works globally but still counts Europe as its biggest market, typically is contractually prevented from talking about its automotive customers.

    This is true for most suppliers, but automakers have been making exceptions when it comes to their relationships with tech players such Qualcomm, Google and Nvidia.

    AUTOMOTIVE NEWS EUROPE PODCAST: July 22, 2021 | Why Harman created an alternative to Google's in-car app store

    Those three are often openly named by automakers when new deals are signed.

    Harman recently experienced something similar when Volkswagen Group's software arm Cariad announced that the supplier would provide its new app store platform.

    The change further underlines that automakers are recognizing it takes a wider tech network to develop the software-defined vehicle.

    "Many people said the chipmakers would dominate the world," Sobottka said. "But there are many more competencies required to bring the industry into a different world."

    Harman's Ignite store will be offered to other automakers to increase the scalability of the platform and ensure it reaches the maximum number of users to make it worthwhile for external developers to grow the app ecosystem.

    Navigating chip shortages

    Harman has been significantly affected by the ongoing shortage of the chips needed to power modern infotainment and audio systems.

    "We need somewhere between 300 and 700 semiconductors per box," Sobottka said. "So, the shortage has consumed an incredible amount of time, money and attention."

    The industry is seeing a better supply of the thinner, more sophisticated chips shared with consumer electronics, Sobottka said, but there continue to be shortages of nodes between 40 and 65 nanometers.

    "They are still constrained, depending on the technology," he said.

    Harman kept production going during the height of the shortage by reducing chips, with an emphasis on impacting the end customer as little as possible.

    "We were able to simplify in certain situations. For example, in a head unit you have four Bluetooth modules but you can also operate with three," he said.

    Harman had to deal with chip suppliers "challenging us with a lot of unexpected price increases" amid the tight supply. The suppler was able to pass along some of that cost to automakers but not all.

    "It has significantly challenged our cost-position," he said, adding that Harman could have increased revenue by 10 to 15 percent without the constraints.

    Despite that, the company's automotive arm grew in 2022 and expects to grow again in 2023. "I think there will be very high volatility in 2023," he said, "but in the longer perspective, we see the recovery of volume."

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