Will Samsung seek to acquire NXP Semiconductors?

By Kim Bo-eun

Market observers are paying close attention to whether Samsung Electronics will purchase NXP Semiconductors, as reports continue about the possibility of the Dutch chip manufacturer finding a new owner.

The possible acquisition is in focus due to the latest global shortage of automotive chips, which has forced global carmakers, such as GM and Ford, to shut down plants temporarily. Earlier this month, U.S. President Joe Biden convened a meeting with chipmaker executives to address the shortage issue.

Samsung Electronics was one of the 19 companies that took part in the meeting, along with other foundry companies and auto manufacturers.

Intel CEO Pat Gelsinger stated after the meeting that the company is in talks with firms that design automotive chips about initiating their manufacture within six to nine months. Local media reported that the White House may also have urged Samsung to contribute to resolving the automotive chip shortage.

Samsung produces only a limited number of automotive chips. Data from market tracker Omdia shows Samsung ranked 24th in its global market share of semiconductors used in cars.

Meanwhile, Samsung stated in an earnings call in January that it could "execute a meaningful acquisition in the next three years." The conglomerate is seen as financially capable of acquiring any of the major automotive chipmakers, with 127 trillion won ($114 billion) in cash in its arsenal. NXP has a market cap of around $55 billion.

A Samsung official on Sunday said that the company cannot comment on speculation.

Questions have lingered over why Samsung has not scaled up its automotive chip production, and market watchers attribute this situation to the low profitability of the business.

"Automotive chips are a promising product and we could supply clients if there is demand," a Samsung official said.

Samsung appears to be interested in manufacturing chips that will be used in future vehicles.

“Setting up lines to scale up automotive chip production in the U.S. to address the current chip shortage for conventional vehicles could be a separate issue from Samsung's interest in acquiring a future car-oriented chipmaker,” an industry official said.

The official also stated that there is a level of skepticism in the industry about investing in new infrastructure to address the current shortage, given that the situation could be resolved sooner than expected.

This time is not the first that NXP has been put up for sale. Qualcomm in 2016 stated that it would seek to acquire NXP, but the deal was cancelled in 2018 after Chinese authorities refused to approve the acquisition. The deal needed approval from nine countries that would be affected by the deal.

Samsung's latest acquisition, in the meantime, was the $8 billion deal to purchase the U.S. car infotainment and audio company, Harman in 2016.

The absence of Samsung leader Lee Jae-yong is also presenting uncertainties over major acquisition deals. The Samsung heir was jailed in January for a bribery case involving former President Park Geun-hye and her confidant, Choi Soon-sil.