[CES2022] Han Jong-hee "Cars are now electronics, good M&A news coming soon"

Samsung Electronics Vice Chairman Hints at Pursuing M&A Across Various Business Sectors

On the 5th (local time), Han Jong-hee, Vice Chairman (Head of DX Division), spoke at the Samsung Electronics press conference held at Caesars Palace Hotel in Las Vegas, USA during CES 2022.
[Photo by Samsung Electronics]

[Asia Economy Reporters Hyewon Kim, Heungsun Kim, Hyunjin Jung] Samsung Electronics is pursuing mergers and acquisitions (M&A) across all business sectors, including semiconductors, mobile, home appliances, and automotive electronics. The world’s attention is focused on whether a major M&A deal will take place for the first time in six years since the acquisition of Harman in 2016.

On the 5th (local time), Han Jong-hee, Vice Chairman of Samsung Electronics and Head of the DX Division, held a press conference at Caesars Palace Hotel in Las Vegas, USA. When asked about plans for a large-scale M&A, he stated, "We are keeping possibilities open for both components and sets." He added, "We are reviewing both short-term and mid-to-long-term targets, but we don’t know which will be completed first." Components refer to semiconductor and display businesses, while sets refer to mobile and home appliances.

Industry insiders have high expectations that Samsung Electronics will execute the largest M&A in its history this year. As of the end of Q3 last year, Samsung Electronics held around 120 trillion KRW in cash and cash equivalents, providing ample ammunition.

In response to a follow-up question on whether M&A would first occur in the automotive electronics sector, Han said, "We are reviewing M&A opportunities across various business areas, so we don’t know where it will be completed first, but we are moving much faster than you think," adding, "Good news will come soon." During an interview at Sony’s exhibition booth that day, he also emphasized, "Cars are now electronics," describing them as "a total integration combined with artificial intelligence (AI) and the Internet of Things (IoT)."

Han also mentioned the possibility of sourcing panels from competitor LG Display for OLED-based TVs to be launched this year. Unlike previous outright denials, he showed a more flexible attitude. This hints at a possibility of ‘super collaboration,’ where Samsung would adopt competitor products if necessary to enhance competitiveness.

"Cars Are Electronics Too"… Collaboration Expected from Sets to Automotive Electronics

At the press conference, Han emphasized, "In the past, the focus was on how products from Company A or Company B differ, but now the key is redefining the product and how to harmonize them to provide valuable experiences to customers." He added, "To create differentiated experiences for customers, we plan to collaborate both internally and externally," and "We will continue bold and diverse attempts without being limited by industry boundaries." This is interpreted as an intention to actively pursue external cooperation through M&A and partnerships following internal organizational restructuring to break down work barriers.

A large-scale M&A possibility in the automotive electronics sector is particularly mentioned. Samsung Electronics is actively developing next-generation automotive semiconductors with the electric vehicle and autonomous driving era in mind, and it is also possible to expand related businesses such as infotainment system software. In fact, Samsung Electronics introduced an augmented reality (AR)-based autonomous driving information system at this CES.

Han also paid close attention to an electric vehicle unveiled by Sony, a competitor in the electronics industry. Later, he told reporters, "The old concept of a car alone is meaningless; it is a total integration of AI, IoT, and more, so it is important what functions are included inside the car to satisfy consumers." He predicted, "Because cars are seen as moving offices, moving homes, and moving lounges, related functions will become increasingly diverse." On the same day, Yoo Young-sang, President of SK Telecom, visited Samsung’s booth and discussed cooperation plans in ICT fields such as 5G, AI, and the metaverse (extended virtual world) with No Tae-moon, President of the MX Division.

Samsung Electronics has been hinting at large-scale M&A possibilities since last year. Despite holding over 100 trillion KRW in cash, Samsung has not conducted any M&A for six years since acquiring the U.S. automotive electronics specialist Harman for $8 billion in 2016. In a January earnings conference call last year, Samsung mentioned the possibility of meaningful M&A within three years and has since been reviewing various fields such as AI, 5G, and automotive electronics, attracting market attention.

After the parole of Samsung Electronics Vice Chairman Lee Jae-yong, there have been expectations that M&A might happen soon. The market anticipates that semiconductor companies such as the Dutch firm NXP and U.S.-based Texas Instruments, which produce automotive semiconductors, as well as domestic and international robotics companies, could be acquisition targets. M&A could also take place in the bio business, which Lee is strategically nurturing. Recently, reports have emerged that Samsung might acquire the U.S. biotech company Biogen.

On the 5th (local time), at the Samsung Electronics press conference held at Caesars Palace Hotel in Las Vegas, USA, Samsung Electronics President No Tae-moon (Head of MX Division, from the left), Vice Chairman Han Jong-hee (Head of DX Division), and President Lee Jae-seung (Head of Home Appliance Division) are answering questions.
[Photo by Samsung Electronics]

"From Strong Denial to Diverse Review"… Changing Trends in OLED Alliance

Han’s emphasis on "actively reviewing" the purchase of LG’s OLED panels for TVs is also noteworthy. Previously, Samsung had drawn a clear line against market speculation about an OLED panel alliance with LG, stating, "We have not reviewed it." Han, who once declared during his tenure as Head of the Visual Display Business Division that "We do not make OLED TVs," now showed a more softened stance compared to his previous statements. He promised, "If it is decided to use (LG’s OLED panels), we will announce it first." LG’s side responded, "If Samsung joins the OLED camp, it would be welcome and positive for expanding the market ecosystem," but also stated, "We cannot disclose information about customers or contractual relationships."

Regardless of the OLED alliance with LG, Samsung Electronics plans to target the global market, where it has held the No. 1 share for 16 consecutive years, by leading premium TV product lines such as Micro LED and NEO QLED this year. They also presented plans to introduce two new lifestyle TV models annually. In addition, the home appliance business, which has targeted the global market with Bespoke, plans to enhance connectivity through AI and IoT this year. The mobile division will focus not only on flagship models but also on popularizing foldable phones. The direction pursued by the DX Division, which oversees these areas, is to strengthen ‘customer experience.’ Han said, "It is a burden to lead DX during times of change, but the big direction has been set," adding, "If employees unite their efforts, I believe it will not be a difficult path."

This content was produced with the assistance of AI translation services.