Despite some of its divisions not performing particularly well this year, Samsung, as a company, is still sitting on about $114 billion of cash that it can't wait to spend. It has eyed up several industry bigwigs, such as Texas Instruments and NXP semiconductors. Acquiring the latter, it turns out, will not be as easy as Samsung envisioned.
NXP Semiconductors may be too big for Samsung to acquire easily
According to some sources familiar with the matter, Samsung is reconsidering its plan to acquire Eindhoven-based NXP Semiconductors. The company's asking price has allegedly shot up to 80 trillion won ($68 billion). While Samsung does have the reserves to complete the purchase, additional costs could creep up due to potential legal issues. Samsung executive had the following to say about the matter.
“NXP Semiconductors was one company on Samsung's shopping list, but the company is second-guessing its acquisition of NXP because NXP is too big.”
Given NXP's dominant market position as a supplier for automotive chips, acquisitions of that scale will undoubtedly attract the attention of anti-trust bodies worldwide. Qualcomm tried to acquire NXP Semiconductors in the past, but the deal failed to go through due to the Chinese government's disapproval. Then again, it might give the green light to Samsung given the close-knit relationship between the company and China.
Additionally, Nvidia's acquisition of British chipmaker ARM has also hit several regulatory snags. It is very likely that Samsung will face such difficulties along the road, and the last thing it wants is to be embroiled in legal battles that can span for years, if not decades.
It is worth noting that Samsung hasn't abandoned the thought of acquiring NXP Semiconductors altogether. The acquisition will go a long way towards bolstering Samsung's position in the semiconductor industry and help bring its in-house automotive/5G/IoT offerings on par with the competition.
Even if the NXP plans get shelved, Samsung is in an excellent position to look at smaller companies to absorb. It has been some time since Samsung has acquired a company and the sheer amount of liquid cash it is sitting on makes the endeavour a whole lot easier.
