Has Samsung Finally Realised Growth Can’t Be Achieved Without Robust M&A Strategy?
11월 5, 2014

As reported by Business Korea, Samsung Electronics has begun to emerge as a player in the global M&A market. In just the last six months the electronics giant, most known for its smartphones, has purchased four foreign companies. The new and aggressive M&A strategy has been adopted to counter profit slumps blamed on falling demand for Samsung's old cash-cow, smartphones.

Recent industry reports suggested that Samsung has acquired caching company Proximal Data in an attempt to enhance its SSD-based software for server systems.

Caching refers to software that improves the speed of storage devices by efficiently storing the most frequently-used data on an SSD. And the US firm is an industry leader, whose services greatly improve server storage capabilities using SSDs by building virtual servers. It is thought that Samsung may be planning additional purchases in this area to expand its SSD business.

While the SSD market had been growing sluggishly, the pace of growth is now increasing rapidly, thanks to falling SSD prices and new use cases in emerging big data and cloud services. Current estimates are that the worldwide SSD market will grow from US$11 billion in 2013 to US$23.5 billion in 2017. Samsung currently leads the market with around 29% market share.

Increased M&A Activity

Since 2007 Samsung is only reported to have acquired 22 companies. Ten of those acquisitions have been since 2013 and four in the last six months. The increase in pace of deals is striking and suggests that Samsung has finally realized that in order to continue leading the industry they will need to find much faster ways to innovate than in the past.

To date a wide range of firms have been acquired by Samsung. These include companies in the semiconductor space, medical equipment, health care, electronics materials, and smart home. Samsung has also employed a diversified type of M&A deals, including purchase of an ownership stake, the acquisition of human assets, as well as a the acquisition of specific business units.

It is no secret that Samsung's smartphone business is struggling. Apple's performance in its domestic market has recently picked up and is still robust globally as well. In addition Chinese smartphone makers have begun to make a dent on Samsung's revenue. Samsung was recently overtaken by Xiaomi in China and even at home, Samsung is threatened by Chinese manufacturers for the first time. An industry source stated that, "Samsung is actively looking for new growth industries as a result.”

Korean Startups As Potential Growth Engine?

While Samsung supporters will be glad that the company is aggressively looking at new business models and growth through diversified means, domestic technology startups are unlikely to benefit any time soon. As yet there still has been no concerted effort by the tech giant to engage with local talent. This seems short-sighted as the domestic tech scene is now developing rapidly and local startups could also provide an avenue for growth.

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