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(LEAD) Samsung further skewed toward M&A push, more investments

All News 13:34 January 28, 2021

(ATTN: ADDS more info in last 6 paras)
By Joo Kyung-don

SEOUL, Jan. 28 (Yonhap) -- Samsung Electronics Co. on Thursday said it aims to clinch merger and acquisition (M&A) deals and expand investments in the upcoming years as the South Korean tech giant eyes to fend off challenges from its rivals amid global uncertainties

In its conference call, Samsung's chief finance officer Choi Yoon-ho said the company will actively use its cash to expand facility investments and pursue M&A deals in a bid to solidify its market-leading position and beef up its future growth.

"We have been very carefully reviewing our M&A options in the past 10 years continuously," he said. "Although it is difficult to specify when we would forge the deal due to global uncertainties, based on our preparations, we think positively significant M&A deals in the next three years."

Samsung's last major M&A deal came in 2016 when it acquired U.S.-based automotive giant Harman International Industries for US$8 billion.

This photo, taken on Jan. 25, 2021, shows the corporate flag of Samsung Group at its office building in Seoul. (Yonhap)

Industry insiders expect Samsung's future M&A deals are likely to come from the semiconductor sector as global chip firms have recently bulked up their sizes by acquiring promising companies in the industry.

According to market researcher IC Insights, the value of M&A deals in the semiconductor industry last year reached a record high of $118 billion, surpassing the previous record of $107.7 billion in 2015.

Major deals in last year include Nvidia Corp.'s takeover of British processor-design firm ARM Holdings for $40 billion, and U.S. chip firm Advanced Micro Devices Inc.'s acquisition of programmable logic giant Xilinx Inc. for about $35 billion.

Samsung's domestic rival, SK hynix Inc., also agreed to buy Intel Corp.'s NAND business for $9 billion last year.

If going for M&A deals, Samsung, currently the world's No. 1 memory chip maker, is expected to acquire companies in the foundry or logic chip sector, industry observers said, following its massive investment pledge.

In 2019, Samsung unveiled a plan to become the world's No. 1 logic chip maker by 2030 by investing 133 trillion won to bolster its competitiveness in the system chip and foundry businesses.

This photo provided by Samsung Electronics Co. on Aug. 30, 2020, shows the company's 16GB LPDDR5 mobile DRAM chip. (PHOTO NOT FOR SALE) (Yonhap)

In recent weeks, speculations have been swirling that Samsung may spend big for production facilities in the United States to catch up with foundry leader Taiwan Semiconductor Manufacturing Co. (TSMC).

According to a Bloomberg report, Samsung is considering building a $10 billion chip plant in Austin, Texas, with a capability to fabricate chips with 3-nanometer technology.

But in a conference call, Samsung said it has yet confirm its chip factory project in the U.S., though it admitted that the company is always considering expanding its foundry capacity.

The world's largest smartphone and TV producer also vowed to expand its capital expenditures in the next three years.

In its conference call, Samsung said its capital expenditures in 2020 reached a total of 38.5 trillion won, up 43 percent from a year ago, which includes a 32.9 trillion-won investment in semiconductors and 3.9 trillion won in spending on displays.

Samsung's latest view on M&A deals and investment plans came at a time when its heir Lee Jae-yong is absent from the helm.

Lee, the de facto head of Samsung Group, was sentenced to 2 1/2 years in prison by the Seoul High Court on Jan. 18 in a retrial of a bribery case involving former President Park Geun-hye and was put behind bars again.

Given the prison time he already has served, Lee will be freed in July 2022, unless he is granted a pardon or commutation.

kdon@yna.co.kr
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