[서울신문] Samsung Electronics with 116 trillion live ammunition… Should I spend a lot of money on automotive semiconductor M&A?

As Samsung Electronics recently announced that it is preparing for a meaningful merger and acquisition (M&A) of companies, there is a prospect that a large amount of money can be spent in the automotive semiconductor field. This is because the importance of preoccupying automotive semiconductors is increasing as the spread of electric vehicles and connected cars (cars connected to communication networks) increases. Since Samsung Electronics owns 116 trillion won (as of the third quarter of last year), SK Hynix acquired Intel’s NAND flash business for $9 billion (about 10 trillion won) in October last year. There are observations that the transaction will take place.

According to the industry on the 2nd, NXP of the Netherlands, ST Microelectronics of Switzerland, Texas Instruments (TI) of the United States, and Renesas of Japan are among the companies that Samsung Electronics is likely to pursue M&A. At the time of the conference call for the 4th quarter of 2020 results announcement on the 28th of last month, Samsung Electronics did not specify the company, but automotive semiconductor companies are rising as candidates. Samsung Electronics, a semiconductor powerhouse, cannot miss the automotive chip business, which is expected to grow rapidly. Vehicle semiconductors were relatively low in profitability compared to PCs and mobiles, but demand is increasing to the point of saying that supply and demand are insufficient these days. In 2018, Samsung Electronics has already selected the automotive electronic equipment field as the ‘4th major future growth business’ and has been investing steadily.

Among them, NXP of the Netherlands is a company mentioned several times as a target for M&A of Samsung Electronics. Qualcomm, a semiconductor company in the US, has also paid attention because it is a’real’ company that has major automakers such as BMW, Ford, Toyota, and Hyundai as customers. In October of last year, Samsung Electronics Vice Chairman Lee Jae-yong went on a business trip to the Netherlands to visit ASML, a semiconductor equipment company, and at that time it is speculated that he had already reviewed NXP.

In the market, the reaction is that it is unusual for Samsung Electronics to inform the outside of M&A, which is mainly conducted under water. As Vice-Chairman Lee was imprisoned for the ruling of the Gukjeong Nongdan case, there were concerns about whether large-scale investments were lost for a while, and this is interpreted as a message to dispel this. Vice-Chairman Lee also recently emphasized to executives and employees through the in-house network, “We must also be faithful to the corporate duty of investment and job creation.”

Samsung Electronics has enough financial power to have cash assets worth 11.6 trillion won. In 2016, it continued aggressive investments such as acquiring Harman, an automobile electronics company, for 8 billion dollars (about 9 trillion won), but has refrained from large-scale M&A since the following year. An industry insider said, “In addition to automotive semiconductors, there is a possibility that large-scale M&A will emerge in businesses that have shown great interest in Samsung Electronics, such as consignment production (foundry), fifth generation (5G) mobile communications, and artificial intelligence (AI).”

Reporter Jaehee Han [email protected]