In a bid to improve its intellectual property portfolio, Samsung intends to ramp up its mergers & acquisitions (M&A) activity in order to develop — or acquire — new technologies and find new growth markets.
Better known for its mobile devices today, Samsung is actually a conglomerate in its home country, with businesses in a wide array of verticals. As the company has grown to be the world's biggest smartphone manufacturer, the game is changing for Samsung, which has found itself strongly pitted against other big names like Apple. Perhaps fueled by its need to vindicate itself of its staggering $1 billion patent infringement loss in 2012, the South Korean company intends to emulate Google in its M&A activities, in order to bolster its IP portfolio.
“Google’s M&A strategy is ideal as Samsung is now pursuing organic growth by acquiring small firms with patented technologies in select areas, not seeking just external growth by expanding its business size,” said a Samsung official only known as “Park” to Korea Times.
Samsung is no longer keen on expansion at this point, but would rather build up its patent portfolio. The company is “focusing on smaller deals in strategic areas,” the official said. These industries include mobile, video, bio-technology and even chips. To this end, Samsung is actually working closely with Google. “Google gives advice and technical assistance on M&A strategies.”
Samsung has actually had only two acquisitions since 1994, which include TransChip from Israel in 2007 and Amica from Poland in 2009. The company official said that money is not an issue, and that Samsung was actually surprised when Google acquired Motorola Mobility in 2011. Samsung will have enough resources to fulfill its M&A plans, as it currently has about 37.45 trillion won (US$34.35 billion) in cash and cash equivalents.
The plan to ramp up its M&A activities seems to be in line with the company's new focus on research and development for more patents, suggesting that Samsung is looking to augment this in-house R&D with third-party patents.
But what benefits will Samsung customers get from an increased IP portfolio? There are some concrete examples. For instance, while Samsung's acquisition of a 5% stake in tablet and digitizer-maker Wacom is not an M&A per se, this has led to the inclusion of styluses in the Galaxy Note and Galaxy Note 2 product lines.
Perhaps with more IP in its hands, Samsung could do so much more, without worrying about the threat of litigation from patent trolls or from big competitors.