Samsung generates hefty profits from BYD, ASML investments

Samsung Electronics' office in Seoul / Yonhap

By Baek Byung-yeul

Samsung Electronics is generating hefty profits through its strategic investments in global partner firms.

According to an audit report submitted by the electronics giant to the Financial Supervisory Service (FSS), shares Samsung Electronics acquired in partner companies including Chinese electric vehicle (EV) maker BYD, Dutch semiconductor equipment maker ASML and Japanese tech company Wacom increased by more than 3 trillion won ($2.6 billion) in total last year.

Among Samsung's financial assets, the capital value of the listed companies in which it invested stood at 7.34 trillion won as of Dec. 31, 2020. That marks a 72 percent increase from 2019 when the figure was 4.27 trillion won. Samsung spent 2.30 trillion won to acquire shares in those companies, translating into a return on investment of around 220 percent.

Samsung's stake purchase in BYD was especially lucrative. The Korean electronics giant acquired a 1.9 percent stake in the Chinese company for 528 billion won in July 2016, and the equity value of its stake in BYD now stands at 1.6955 trillion won, up more than 300 percent.

However, Samsung said the purpose of buying a stake in BYD was to strengthen ties with the EV maker and improve its capability in the fast-growing vehicle semiconductor market. As a result, the Korean chip maker is not expected to consider an exit plan from the Chinese EV maker any time soon.

ASML is another company that could generate handsome investment returns for Samsung.

In 2012, Samsung acquired a 3 percent stake in the chip equipment maker for 500 million euros. The Korean tech giant decided to become a stakeholder in the Dutch company, which is the world's largest manufacturer of lithography systems used to print circuit patterns on silicon wafers. ASML is also the only supplier of extreme ultraviolet (EUV) technology-based lithography equipment, a core product used to make smaller and more power-efficient chips.

In September 2016, Samsung sold half of its stake in ASML for about 740 billion won. The acquisition cost of the remaining 1.5 percet stake in ASML was 363 billion won, but the book profit, as of the end of 2020, stood at 3.35 trillion won.

Samsung also holds a 5 percent stake in tablet stylus maker Wacom after acquiring the stake for 62.013 billion won in 2013 as part of efforts to strengthen business ties. Wacom is a leading company in technologies and products related to interactive pen displays and also makes the stylus pens for Samsung's Galaxy Note phones and Galaxy tablets. As of the end of 2020, the book profit from Wacom stood at 76.589 billion won.

Domestic companies in which Samsung acquired stakes include chip-making equipment maker Wonik IPS and semiconductor packaging company SFA, holding 7.5 percent and 10.2 percent stakes respectively.