Samsung Electronics formalizes M&A preparation… Expansion of facility investment (total)
Conference call “Preparing for meaningful M&A”… Appears to communicate with Vice Chairman Lee Jae-yong
Net cash reached 104 trillion won… Industry semiconductor, 5G, AI companies, etc. acquisition prospects
Continued expansion of facility investment… Pyeongtaek, Austin, USA, etc.
(Seoul = Yonhap News) Reporter Seo Mi-sook and Kim Chul-seon = Samsung Electronics[005930]Announced that there will be meaningful mergers and acquisitions (M&A) in the near future. It is also expanding large-scale investments in semiconductor fields such as foundries.
In a conference call held after the announcement of 4Q results on the 28th, CEO Yoon-ho Choi (CFO) of Samsung Electronics’ Management Support Office said, “Samsung Electronics intends to strengthen its market leadership position in the existing industry and strengthen the foundation for sustainable growth in new industries.” “We will strategically expand facility investment and promote M&A by actively using the resources we have for this purpose.”
This is the first time that Samsung Electronics officially mentioned an M&A since it completed its acquisition of Harman, an automotive electronics company in February 2017.
There have been many observations in the industry that Samsung Electronics is passive in M&A due to the judicial risk of Vice Chairman Lee Jae-yong.
President Choi said, “Amidst uncertainties such as the global trade conflict and the spread of Corona 19, competition intensifies and technological difficulty increases, so the scale of investment in R&D and facilities such as foundries required for sustainable growth will increase in the future.” “You have to have the capacity to execute M&A in order to capture it.”
President Choi’s remarks on the day came in the process of explaining the shareholder return policy to be carried out for three years (2021-2023) from this year.
Regarding the point that there was no meaningful M&A during the last shareholder return policy period (2018-2020), President Choi explained, “We have continuously reviewed M&A targets very carefully over the past three years, and accordingly, we are prepared a lot.” did.
He said, “It is difficult to specify the timing of implementation due to the current internal and external uncertainty, but there is a high possibility of realizing a meaningful M&A within this (shareholder return) policy period based on what we have prepared so far.”
President Choi also said, “In the last period of the shareholder return policy, the cash holdings increased due to the failure to properly carry out M&As, and it is true that the continuous increase in cash is also burdened by the company management.”
As of the end of last year, Samsung Electronics’ net cash amounted to 104 trillion won. Even if Samsung Electronics spends 50% of its free cash flow (FCF) on dividends, the remaining surplus will continue to accumulate in cash unless facility investment or M&A is conducted.
The term’within this policy period’, which President Choi referred to as the M&A period on this day, means within 3 years from this year. However, the industry is in the mood for M&A to take place in the near future, as Samsung has consistently reviewed M&A targets for a long time and said that it is ready for a lot.
Samsung Electronics did not specify the target of the acquisition on this day. However, in the market, the acquisition of semiconductor-related companies is the highest.
Global semiconductor companies are recently reorganizing the market through a joint venture.
Currently, NVIDIA, AMD, SK Hynix[000660] In order to secure future growth engines, global semiconductor companies such as ARM (Am Holdings), Xilinx, and Intel NAND divisions each acquired promising companies with enormous funds.
Qualcomm, a rival of Samsung Electronics’ communication chips, recently spent $1.4 billion (about 1.5 trillion won) to acquire Nubia, a semiconductor startup central processing unit (CPU) design company.
For this reason, there are many expectations in the industry that Samsung Electronics will acquire a promising company in the system semiconductor or foundry field to achieve the goal of’No. 1 in system semiconductor by 2030′.
However, there is also a prospect that the acquisition target will emerge among companies related to next-generation mobile communications such as 5G, artificial intelligence (AI), and electronic equipment business, which Vice Chairman Lee Jae-yong is pushing as another future business.
President Choi’s remarks on this day seem to have had prior rapport with Vice Chairman Lee Jae-yong, who is in prison.
On the 26th, Vice Chairman Lee stressed, “Regardless of the situation in which I am facing, Samsung should continue to follow the path that should be taken,” and said, “It should be faithful to the corporate duty of investment and job creation.”
In response to concerns that Samsung Electronics’ management disruptions and large-scale investments will become difficult after the recent arrest of Vice Chairman Lee, he requested that the total proceeds without a gap.
In order to close the gap with Taiwan’s TSMC, Samsung Electronics is also expected to significantly expand investments in the foundry sector, such as the establishment of extreme ultraviolet (EUV) equipment and new factories.
Foundry rival Taiwan’s TSMC predicts a huge investment of up to 30 trillion won this year, and Samsung is also in need of a large-scale investment. Samsung must first confirm the investment plan for the P3 line in Pyeongtaek, which is currently under construction.
Recently, foreign media are vigorously reporting Samsung’s US investment plan.
Bloomberg Telecom said on the 21st (local time), “Samsung Electronics is investing more than 10 billion dollars (about 11 trillion won) to build a semiconductor factory in Texas, USA,” said “Samsung Electronics will manufacture up to 3nm chips in the future. “We are discussing to establish a possible factory in Austin.”
The Wall Street Journal (WSJ) also cited a source on the 22nd (local time) and reported that “Samsung Electronics is considering an investment of 17 billion dollars to build a semiconductor plant in Arizona, Texas or New York.” Are doing.
An industry insider said, “Samsung Electronics has also finished reusing the site it purchased near the factory in December last year in preparation for the expansion of the Austin factory,” and “Samsung should also look into the situation with the US and China, but considering the expansion of investment by competitors, Samsung will sooner or later. We have no choice but to decide on a large investment,” he predicted.
However, Samsung Electronics said at Concall that “it has not been decided yet” regarding new investments in semiconductor factories in the US.
“Because of the nature of the foundry business, expanding production capacity to quickly respond to customer demand is a constant review,” said Han Jin-man, vice president of memory business division of Samsung Electronics. “We have been looking for sites in Giheung, Hwaseong, Pyeongtaek and Austin, USA We are reviewing it.”
[email protected]
(End)
<저작권자(c) 연합뉴스, 무단 전재-재배포 금지>