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<\/p>\nIn 2016, newly appointed leader Lee Jae-yong began orchestrating Samsung\u2019s last big deal to diversify its business: the $8bn acquisition of US automotive audio and electronics leader Harman International, positioning the company as a supplier for the sector as its use of digital technology grew.<\/p>\n
Almost a decade later, Lee is once again turning to acquisitions to help Samsung secure its technological edge. He set up the company\u2019s first official M&A team in November, led by president and veteran dealmaker Ahn Joong-hyun as it fights to stay competitive in the global AI race. <\/p>\n
Samsung, one of the world\u2019s largest chipmakers and electronics manufacturers, has lagged behind peers SK Hynix and Micron in the race to supply advanced memory chips for the artificial intelligence build-out.<\/p>\n
The South Korean conglomerate has faced mounting pressure from shareholders to deploy its cash reserves of Won108.5tn ($74bn) to accelerate its growth in areas including AI, chip design and software.<\/p>\n
\u201cSamsung is facing the last golden time to restore its technological edge by investing in new growth areas with the profits made from this semiconductor supercycle,\u201d said Park Ju-geun, head of corporate research group Leaders Index. \u201cThere is no better way out of its technological impasse than effective M&As.\u201d<\/p>\n
The company said that it was looking at M&A targets \u201cto actively cope with fast-changing global technology trends\u201d in areas including AI, medical technology and robots, the company told analysts during a quarterly earnings call in July.<\/p>\n
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The Harman acquisition marked Samsung\u2019s biggest deal in its history. The US company\u2019s initial performance was weak but the subsidiary now generates greater profits than Samsung\u2019s television and home appliance divisions: it posted Won1.3tn in operating profit last year.<\/p>\n
But since the purchase of the US company, Samsung has not closed any deals of that magnitude. Over the past year, the tech group has completed six acquisitions, including a deal to buy German data-centre cooling company Fl\u00e4ktGroup for \u20ac1.5bn.<\/p>\n
It also bought US digital healthcare company Xealth, French medical tech group Sonio SAS, US AI developer Oxford Semantic Technologies and South Korea\u2019s Rainbow Robotics. However, these deals have underwhelmed investors hoping for game-changing acquisitions, according to analysts and fund managers.<\/p>\n
After being cleared by the Supreme Court of accounting fraud and stock manipulation charges earlier this year, Samsung\u2019s chair Lee is expected to focus on revitalising the business. <\/p>\n
In recent weeks, the third-generation heir of the founding family has held a series of high-profile meetings with global technology leaders including Nvidia\u2019s Jensen Huang and OpenAI\u2019s Sam Altman to expand co-operation.<\/p>\n
\u201cLee\u2019s legal risks have put the company on the defensive for years but investors expect him to run the company more actively with his legal trouble gone now, to strengthen the company\u2019s competitiveness in this AI-focused new business environment,\u201d said Jongmin Shim, Korea equity strategist at CLSA.<\/p>\n
Shim added: \u201cDespite the recent improvement, investor concern lingers over Samsung\u2019s competitive edge in HBM [high bandwidth memory] or other next-generation chips.\u201d<\/p>\n
Albert Yong, managing partner at Petra Capital Management, a Seoul-based hedge fund and Samsung investor, said the creation of the M&A team signalled Samsung\u2019s determination for \u201cmore aggressive\u201d deals but cautioned that investors have raised concerns over the tech group\u2019s capacity for post-acquisition integration.<\/p>\n
\u201cIf you look at US Big Tech companies, they have been able to sustain their growth mostly through M&As,\u201d he said. \u201cAcquisitions can be an effective means for Samsung to catch up in the AI space, chip design and software businesses.\u201d<\/p>\n
He added: \u201cBut I still doubt if they [Samsung] are good at integrating their acquisition targets. Bolt-on acquisitions rather than big deals seem more desirable to strengthen their technological edge while avoiding risks.\u201d<\/p>\n
Until recently, Samsung was seen as a laggard in advanced memory chips. However, sentiment has shifted after the company began shipments of its most advanced HBM chips to Nvidia in September and its quarterly profits<\/a> jumped more than 30 per cent on higher chip prices. <\/p>\n Strong AI-driven demand for memory chips has helped Samsung recover from a series of mis-steps, such as its underestimation of HBM chip potential, with the stock price doubling this year to Won100,800, a near record high.<\/p>\n
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