By Kim Hyun-bin
Concerns are growing over Samsung's plan to acquire global rivals after regulatory authorities in the U.S., Europe and other countries disapproved Nvidia's acquisition of ARM, which could have been a "mega deal" in the semiconductor industry, according to industry analysts Friday.
The high-profile acquisition fell through as major countries showed opposition citing monopoly concerns. This is expected to adversely affect Samsung Electronics' plan to expand its semiconductor business by acquiring smaller companies, the analysts said. Samsung Electronics is said to have amassed a war chest of around 106 trillion won in cash as of last December.
"The difficulties in conducting mergers and acquisitions (M&As) not only applies to Samsung, but all semiconductor industries. SK hynix was lucky to get approval last year, but now countries and companies are strongly opposed to it, so I think there will be many difficulties in conducting global M&As in the future," said Kim Yang-paeng, a researcher at the Korea Institute for Industrial Economics & Trade.
Last week, Taiwan Global Wafers failed in its bid for Germany's Siltronic due to opposition from the German government. In March of last year, Chinese regulatory authorities did not approve a bid by U.S. Applied Materials to acquire Japan's Kokusai Electric. SK hynix also received conditional approval from Chinese authorities after waiting over a year to acquire Intel's NAND Flash division.
Since the global supply shortage of semiconductors began, there has been growing vigilance over specific companies or countries obtaining strong dominance in the semiconductor market.
Samsung Electronics, which aims to become No. 1 in system semiconductors by 2030, is expected to continue acquiring smaller players, and there are predictions that it will bid for automotive semiconductor companies such as Germany's Infineon and the Netherlands' NXP. However, as antitrust authorities are applying strict rules and standards, there is a possibility that Samsung Electronics will hit a wall in its pursuit of these deals.
There are also concerns that M&A conditions may become stricter in the system semiconductor business, which is just about to expand, due to checks from major countries that are concerned about Samsung Electronics' excessive influence in the overall semiconductor market.
"Most countries are correlating semiconductors with national security so they are more reluctant to approve the mergers. But we are watching the global situation closely," a Samsung Electronics official said.
Many experts point out that although conducting M&As is a useful tool to gain competitiveness, it will take more for Samsung to become the world's leading semiconductor company by 2030.
"Foundries are likely to become the focus of Samsung's M&As. Because of the title of being in second place right now, however, there is a huge gap between Samsung and TSMC," Kim said. "Even with a large-scale M&A, it is difficult to catch up with TSMC as the company's market share is three times larger than Samsung, which means there is a threefold difference in production capacity. Even with the M&A, there is no factory large enough to fill the gap."
