Samsung is reportedly considering acquiring NXP Semiconductors, Renesas Electronics, or Texas Instruments (TI) to bolster its automotive chip sector presence. The Korea Times stated the corporation is interested in buying Infineon Technologies for the same reason.
The conglomerate views those companies as potential purchase targets because of their leading positions in the electronic vehicle parts field.
The firm is looking to become a more prominent vehicle component player since it sees substantial growth potential in the market.
Which Automotive Chip Manufacturer Will Samsung Pursue?
Samsung ended Q3 2020 with cash and equivalent assets on hand totaling ₩116.2 trillion ($104.1 billion). With that amount of capital, it could buy Infineon, Renesas, and NXP individually without taking on extra debt. However, the firm would need to negotiate payment terms to acquire Texas Instruments, which is currently worth $155.9 billion.
Since Samsung can afford to buy one or more automotive chip providers, the question becomes which one best suits its goals.
Based on past evidence, the conglomerate likely views NXP and TI as the most enticing M&A targets. An unnamed financial industry insider told Business Korea the electronics giant investigated buying the two companies in 2019. It also made an offer for NXP in 2016 but lost out to Qualcomm’s ultimately failed takeover bid.
That said, it would benefit from bringing any of the automotive sector’s leading chip providers under its umbrella.
If Samsung bought NXP, it would gain control of its market-leading infotainment center technology. On the other hand, TI owns a host of vehicle power management circuit products. Renesas possesses a slew of car microcontroller units (MCU). And Infineon holds a number of telematics, motor control, electric power train, and advanced driver assistance systems (ADAS) component patents.
Samsung would also acquire a significant share of the vehicle semiconductor market by purchasing NXP (21 percent), Infineon (19 percent), Renesas (15 percent), or TI (14 percent). The financial appeal of the above-listed firms easily transcends any concerns about the current global auto electronic parts shortage.
As of this writing, the South Korean corporation has not expressed its intent to take over any particular company.
Why Samsung Wants a Bigger Stake in the Automotive Chip Market
Samsung wants to be a major player in the auto chip business to ensure its long-term success.
While publishing its Q4 2020 financial results, the firm mentioned expanding its technological and manufacturing resources is a near-term priority. It recently completed designs for new 4nm products and is developing a 3nm node. It is also building a new fab in Pyeongtaek, South Korea, to expand its production capacity.
However, Samsung also said it is working to grow its business by making some strategic acquisitions.
The company has also taken an increasing interest in the automotive segment in recent months. It made a deal with electric vehicle (EV) giant Tesla to fabricate its 5nm ADAS components. Plus, it supplies Audi and BMW with cutting-edge chips to optimize their fleets’ functionality and telematics systems.
For Samsung, purchasing a leading electronic car parts manufacturer is the next step in its evolution. It is also a smart business move since electrification and self-driving car platforms are becoming increasingly popular. Since those innovations require higher semiconductor counts per unit, their rising popularity is rapidly expanding the market.
Research group Gartner anticipates personal transports will feature $1,000 in chips by 2024, up from $400 in 2018.
Samsung would be well served by capitalizing on a segment that is entering a boom period. Purchasing NXP, Renesas, or TI would enable it to establish a big footprint in the marketplace without years and costly R&D and promotion. It would also give its foundry business a boost by acquiring multiple specialized fabs.
Those advantages and its recent statements suggest Samsung could make a game-changing M&A announcement relatively soon.