Escaping Crisis
Samsung Electronics is emerging as a big player in the global M&A market, as shown by its purchase of four foreign companies over the past six months. Over the period, the Korean firm has bought many kinds of companies in different manners. Suffering from declining smartphone sales, Samsung is gambling on aggressive M&A strategies.
According to the electronics industry on Nov. 3, Samsung has acquired caching company Proximal Data to try to enhance its SSD-based software for server systems.
The US-based firm has core technologies in caching software, which greatly improves server storage capabilities using SSDs by building virtual servers. Caching refers to software that improves the speed of storage devices by efficiently storing the most frequently-used data on an SSD.
The Korean tech giant is planning to strengthen its competitiveness in solutions needed for SSDs for servers through this acquisition, and to expand its SSD business based on 3D V-NAND flash memory chips.
SSDs can handle data faster while radiating less heat than existing hard disk drives, which store data at hard disks, but they are more expensive. Due to its limited use in corporate servers or expensive laptops, the SSD market was unable to grow fast.
However, the market is now growing rapidly, as SSD prices have recently been decreasing thanks to mass production. Moreover, hard disk drives have proven to not be particularly suitable for big data and cloud services. According to market research firm Gartner, the worldwide SSD market is expected to grow from US$11 billion in 2013 to US$23.5 billion in 2017.
Samsung accounted for 28.5 percent of the global SSD market last year, which put the firm in the top spot. The number is more than twice as high as the figure for Intel in the runner-up position, with a 13.1 percent share. The third, fourth, and fifth spots were taken by Sandisk (a 11.7 percent share), Micron (a 6.9 percent share), and Toshiba (a 5.6 percent share), respectively.
Over the last six months, Samsung has purchased 4 companies, and the number amounts to 10 firms since 2013. It means that almost half of its 22 M&A deals, which have been achieved for 8 years since 2007, have been made over the past two years alone.
The Korean company has bought various kinds of firms, ranging from the semiconductor areas to medical equipment and health care to electronics materials, and to smart home. Samsung has also went beyond traditional corporate takeover and diversified the type of M&A deals through a purchase of an ownership stake or human assets, or a split acquisition of specific business units.
Experts are saying that Samsung is actively seeking to be involved in the M&A market, as its worsening performance ignited rumors about its crisis. A source in business circles remarked, "Samsung's smartphone business is struggling, since Apple is still showing good performance. On top of that, Chinese firms are chasing the Korean firm." The source concluded by saying, "Samsung is actively looking for new growth industries as a result.”