Samsung may acquire automotive semiconductor companies, many are considering
A few days ago, the chief financial officer of Samsung Electronics stated on the earnings call that the next three years will take an active merger strategy to improve competitiveness. Subsequently, Samsung Electronics' Mu0026A list sparked speculation in the industry.
According to South Korean media reports, a person familiar with the matter disclosed on February 1 that Samsung Electronics may try to acquire companies in the automotive semiconductor field, such as NXP in the Netherlands, Texas Instruments in the United States, Renesas Electronics in Japan and Infineon in Germany.
Automotive semiconductors have huge growth potential. According to market research company Gartner, in 2018, the value of bicycle semiconductors was US$400, but it is expected that by 2024, this number will exceed US$1,000. In view of the huge growth potential of the automotive chip business, and Samsung, as the world's largest memory chip manufacturer, lags far behind the above-mentioned target companies in this field, it is reasonable to plan to acquire one of them.
Pak Yu-ak, an analyst at the securities company Kiwom Securities, said that there is no clear leader in the automotive chip business, so Samsung’s share has room for improvement. The company is trying to expand its influence by providing Exynos automotive chips to well-known automakers such as Audi, and the company's 5G telematics control unit chips will be used in BMW's new electric cars.
Image source: Samsung Electronics
The above target companies have their own advantages. NXP has outstanding technical capabilities in application processors (AP) and automotive infotainment, and it is expected to create huge synergies with Samsung Electronics' subsidiary Harman. In 2019, after Samsung announced its system-on-chip growth plan, there were rumors that NXP, Xilinx and Infineon would enter Samsung’s list of mergers and acquisitions. There are reports that Samsung has conducted due diligence on NXP and believes that NXP is a strong competitor for this acquisition.
Based on its expertise in analog semiconductors, Texas Instruments focuses on manufacturing high-voltage power semiconductors, which are a key part of electric vehicles; Renesas is a microcontroller unit (MCU) Leading manufacturer, occupying 31% of the global MCU market, and acquiring semiconductor design company IDT in 2018, enhancing its competitiveness in autonomous driving semiconductors.
Currently, the market value of Texas Instruments is 173.68 trillion won, NXP is 51.22 trillion won, and Renesas is 22.34 trillion won. Industry analysts predict that if it does acquire one of the above-mentioned companies, Samsung will complete the largest transaction since the acquisition of Harman.
In terms of capital, Samsung has sufficient funds to acquire any of the above companies. As of the third quarter of 2020, the cash-equivalent assets of the technology giant reached 116.2 trillion won (approximately US$104.1 billion). However, as semiconductors are increasingly regarded as a strategic product, it is still unknown whether Samsung can successfully obtain regulatory approval from the Fair Trade Agency of the chip powerhouse.
Due to the COVID-19 outbreak and the rising demand for IT equipment chips, a shortage of automotive semiconductors has emerged. Since December last year, automakers have faced unprecedented difficulties in chip supply and have begun to reduce production. TrendForce, a market research organization, said that since chip makers must modify their production lines to produce more automotive semiconductors, the shortage of automotive chips will continue.
In addition, some people in the industry speculate that Samsung is paying attention to foundry manufacturers. In order to compete with TSMC, it is very important to expand foundry facilities and production capacity. Some people in the industry said that 'companies such as Global Foundry Semiconductor may also be considered.'
