NXP, TI, Renesas among Target Companies
As Choi Yoon-ho, chief financial officer of Samsung Electronics, officially announced the company’s plan to aggressively pursue M&A deals at a conference call on Jan. 28, the M&A market is turning its eyes to the automotive semiconductor industry.
NXP in the Netherlands, Texas Instruments (TI) in the U.S., and Renesas in Japan are emerging as attractive M&A targets for Samsung Electronics. "Samsung Electronics already conducted due diligence on NXP and TI in 2019," an investment banking industry insider said. There have been persistent rumors that Samsung is considering acquiring NXP.
Automotive semiconductors have huge growth potential. According to market research firm Gartner, the value of semiconductors put into a single car was US$400 in 2018, but the figure is expected to exceed US$1,000 in 2024 when self-driving cars will become popular,.
Each of these companies has its own strengths. NXP, which has excellent technical capabilities in application processors (APs) and infotainment for vehicles, is expected to generate great synergies with Harman, a Samsung Electronics subsidiary.
TI specializes in manufacturing high voltage power semiconductors, which are key devices for electric vehicles, based on its expertise in analog semiconductors.
Renesas is a leading producer of micro controller units (MCUs), a component that accounts for the largest portion (30 percent) of the automotive semiconductor market. Renesas enjoys a 31 percent share of the global MCU market, competing neck and neck with NXP. The company also increased its capabilities in self-driving semiconductors by acquiring IDT, a semiconductor design company, in 2018.
"Samsung should continue to move forward regardless of my situation," Lee Jae-yong, vice chairman of Samsung Electronics, recently stressed in a message from behind bars, dispelling concerns about a delay in pursuing M&A deals due to the absence of the head of the company.
Industry analysts predict that Samsung Electronics will make the largest deal since its acquisition of Harman. TI's market capitalization amounts to 173.68 trillion won, that of NXP 51.22 trillion won and that of Renesas 22.34 trillion won. Samsung Electronics also has strong financial resources for M&A deals. Its cashable assets alone amounted to 116 trillion won as of the end of the third quarter of 2020. "We are positively considering making M&A deals in various fields apart from semiconductors." said a representative of Samsung Electronics.