Global Tech Giants Strengthening Their Competitiveness by Acquiring AI Startups

Global information technology (IT) companies, including Samsung Electronics, Google, Microsoft (MS) and Apple, are strengthening their competitiveness through merger and acquisitions of artificial intelligence (AI) startups. This is because AI is the core of healthcare, autonomous vehicle and smart home, which are considered the next-generation growth engine.

Recently, even venture capital companies specializing in the machine learning and humanoid robot sector have appeared in the industry.

In major advanced countries, mainly in the U.S., not only IT firms, such as Google and MS, but also global automakers, like General Motors and Toyota, are actively seeking to take over and invest in AI startups. Google is buying numerous AI startups, including DeepMind which developed the AlphaGo AI program, while MS has recently acquired the British software company SwiftKey with a large amount of money. This is because AI is a critical technology of their growth engines – driverless car and personal assistant. 

Moreover, Toyota set up its AI research center in Silicon Valley, the U.S., early this year and recently completed the additional establishment of the big data research center worth US$5.5 million (6.34 billion won), which was jointly invested by MS.

With the investments in AI being actively made across the world, domestic companies are also seeking to invest in AI startups in earnest. Accordingly, the movements are expected to become the priming water to win back the IT powerhouse status in the AI sector in which the country is at least two years behind advanced countries. In particular, Samsung Electronics, LG Electronics, Hyundai Motor Group, SK Telecom, KT and Naver will invest 3 billion won (US$2.6 million) each to build the intelligence information technology research center and send out their excellent researchers by the end of this year. 

Local venture capital firms are also paying attention to AI startups. SoftBank Ventures Korea invested 1 to 2 billion won (US$866,927 to 1.73 million) in Lunit, Scatter Lab and TomoCube each. K Cube Ventures and BonAngels also made the initial investments in Vuno, Solidware, UVify and Standigm as well as Lunit. FuturePlay, a startup specializing in IT technology and company builder, is intensively fostering Uberple, KonoLabs and Fluenty.

Lee Hee-woo, CEO of Cognitive Investment, a venture capital company specializing in cognition science, including AI, said, “We are planning to invest in startups specializing in robots, such as robo advisor and humanoid robot, in Japan, which is ahead of Korea in the AI sector. It is urgent to invest in AI startups and related technologies.”

According to the U.S.-based market research firm CB Insights on Apr. 8, the total investments in AI startups last year amounted to US$300 million (346.05 billion won). The figure is over 15 times higher than US$19 million (22 billion won) in 2011. CB Insights said, “Samsung has been the fourth largest investor in the global AI startup M&A market in the past five years.” Samsung is said that it made investment in a total of 10 AI startups, including Vicarious, through Samsung Venture Investment.