Samsung Scouting For M&A Deals To Dominate Non-Memory Chips, Infineon Technologies And NXP Semiconductor Potential Targets
German chipmaker Infineon Technologies and Dutch semiconductor company NXP Semiconductor are reportedly on the radar of Samsung as potential targets for acquisition with the South Korean conglomerate aiming to grow its non-memory business.
The gap between TSMC and Samsung in pureplay foundry revenue is so wide that it will not be easy for Samsung to catch up anytime soon focusing purely on advanced node competition. This along with growing demand for chips with "mature nodes" may have prompted Samsung to look at acquiring companies like Infineon and NXP
German chipmaker Infineon Technologies and Dutch semiconductor company NXP Semiconductor are reportedly in the radar of Samsung as potential targets for acquisition with the South Korean conglomerate aiming to foster its non-memory business.
Samsung is the dominant player in memory chip market (both DRAM & NAND). It has 44% market share in DRAM chips (dynamic random access memory used for temporary storage in desktops) and 36% in NAND devices (used for permanent storage in mobiles).
The real big prize the company is aiming - to become the world leader in logic chips by 2030. Global semiconductor players are in a race to produce even more powerful chips to support new technologies such as fifth-generation (5G) mobile networks, connected cars and artificial intelligence (AI).
By the end of 2020, Samsung had emerged as the second biggest player (by revenues) in the overall electronics industry (approximately $220 billion revenue versus Apple's $260 billion).
In terms of semiconductor sales in 2020, Samsung was at the second position behind U.S Chip behemoth Intel(approximately $62 billion revenue versus Intel's $76b). It was second in contract IC manufacturing or pure play foundry (approximately $15 billion revenue next to Taiwanese contract chip manufacturer TSMC's $46 billion)
Despite energetic efforts by its CEO Pat Gelsigner, 2021has been a disappointing year for Intel as the company revenue growth was almost stagnant. Samsung's overall semiconductor revenue is expected to be around $83 billion thereby making it a clear #1 ahead of Intel. However in the foundry revenue, Samsung will continue to be a distant second (estimated approx $18 billion against TSMC's $57 billion).
In its battle with TSMC, Samsung has so far focused on advanced nodes - it is attempting to produce 3nm chips in the first half of 2022 ahead of TSMC which has updated its schedule to last quarter of 2022 . Samsung's 3nm is expected to be based on "Gate-all-around" transistors (GAAFET) while TSMC is believed to continue with FINFET . Some analysts believe that the 'early' learning experience on GAAFET may give an advantage for Samsung during 2nm production in 2025
However, the gap between TSMC and Samsung in pureplay foundry revenue is so wide that it will not be easy for Samsung to catch up anytime soon focusing purely on advanced node competition. This along with growing demand for chips with "mature nodes" may have prompted Samsung to look at acquiring companies like Infineon and NXP, both of which make microcontroller units (MCUs) and power management integrated circuits (PMICs) for automobiles.
NXP is also one of the leading non-memory chip suppliers and a diversification will help Samsung reduce its over dependence on memory chips whose market fluctuates a lot. With the acquisition of freescale, NXP also has a broad portfolio covering areas like communications processors as well as RF power transistors
Infineon also has a diverse portfolio including automotive, industrial power control, sensor systems and secure systems like chips needed for e-passport. In 2020 Infineon also completed acquisition of Cypress semiconductors. In Sep 2021, Infineon opened a 'high-tech chip factory for power electronics'. Infineon also has GaN and SiC products for power electronics.
It is not clear whether Samsung is eyeing both the companies or only one of them and how far the efforts have progressed, if at all. Regulators in EU may intervene to prevent firms in strategic sectors like Infinion or NXP from being sold to companies of other countries.
Samsung was among the companies that India's Minister of State for Electronics Rajeev Chandrashekhar mentioned as "would love to see invest in India" in the wake of a $10b incentive package offered by the government of India including up to 50% fiscal support for 28nm or below Silicon CMOS fabs or up to 30% fiscal support for a range of fabs like compound semiconductor fabs, sensor fabs, Silicon Photonics fabs or 65nm Silicon CMOS
However it is not clear if Samsung has indeed expressed an interest in setting up a fab in India. With indications from the company that it wants to aggressively catch up to TSMC in an effort to get closer to the #1 in foundry segment while consolidating its lead in overall semiconductor sales, proactive efforts from India may be worth a try.
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