Samsung renews M&A approach amid antitrust concerns

Samsung Electronics Vice Chairman Lee Jae-yong, left, poses with Google CEO Sundar Pichai on the sidelines of his visit to Google headquarters in Mountain View, Calif., Nov. 22. Courtesy of Samsung Electronics

By Baek Byung-yeul

Expectations are that Samsung Electronics is on track to renew its approach to merger and acquisition (M&A) activities, after watching U.S. graphic chip giant Nvidia struggling with its acquisition of British chip company ARM due to antitrust concerns.

With its ample liquidity, Samsung Electronics has said numerous times that it will push for large-scale acquisitions in the coming years as the company is in desperate need of strengthening its competitiveness. As of the third quarter of this year, Samsung's cash- and cash-equivalent assets added up to 200 trillion won, according to Samsung officials.

Though the company didn't specify any current M&A targets or specific timing for any possible deals, the chip giant is still interested in chip foundry firms.

However, metrics in the global M&A market have changed slightly, as the antitrust bodies of major countries are increasingly reluctant to approve acquisition deals involving companies in strategic industries such as semiconductors and batteries. The Korea Times reported in August this year that Samsung started rethinking its plan for an acquisition of NXP Semiconductor because of the tough possibility for approval from antitrust regulators in key countries in Europe and the United States.

On Dec. 2, the U.S. Federal Trade Commission (USFTC) finally sued to block Nvidia's $40 billion acquisition of ARM, out of concern that the M&A deal could give too much power to a particular company.

"The FTC's complaint alleges that the combined firm would have the means and incentive to stifle innovative next-generation technologies, including those used to run data centers and driver-assistance systems in cars," the commission said in a statement.

Thoughts are that the USFTC's suit comes as a final blow to cancel the transaction. ARM is a global leader in mobile chip architecture design and it generates profits by licensing its intellectual property to tech firms including Samsung Electronics, Apple and Qualcomm. There have been concerns that if Nvidia acquires ARM, it might not grant chip design licenses to its competitors.

This could happen to Samsung as well if it decides to acquire a company. As any kind of M&A deals which would have greater impact on affected industries are attracting keen attention of antitrust bodies globally, it will be difficult for Samsung to earn approvals from major countries, said officials.

Reflecting on the case of Nvidia, Samsung's M&A approach could be like the one taken by Google, Meta and other IT giants, which are pursing consistent small deals by acquiring stakes in companies with a competitive edge.

Samsung may have learned this approach from Google. Last Month, Samsung's chief Lee Jae-yong met with Google CEO Sundar Pichai at Google headquarters in California during his business trip in the U.S.

Lee, who completed his first series of overseas business meetings in the U.S. last month, after five years, will depart on Monday night for meetings to be held in UAE. There has been speculation that Lee could seek new business opportunities during his trip to the Middle East, and there is also a possibility that he may extend his trip to include Europe after visiting the Middle East.

A Samsung official declined to confirm on whether Lee's departure is related to possible M&A deals, only saying the meetings are intended to resume his personal ties with the company's top corporate clients.

Regarding Lee's impending UAE meetings, a Samsung official said his schedule in the Middle East is being released, adding "Lee is trying to expand his management activities overseas as a leader of a global company."

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