J.P. Morgan analyst JJ Park mused Tuesday about what companies Korean electronics giant Samsung might be interested in buying.
Simon Dawson/Bloomberg
Korean giant Samsung Electronics might be shopping for an acquisition.
Samsung (005930.Korea) has $114 billion in cash on its balance sheet and less than $20 billion in debt. Companies can get a lot for $100 billion or so, and J.P. Morgan analyst JJ Park believes that Samsung will be looking for U.S.-based automotive semiconductor companies.
Samsung is reportedly interested in NXP Semiconductors (NXPI). That news hit earlier this year, and a deal makes sense to Park. NXP, however, isn’t the only semiconductor maker Samsung might be considering
He believes Texas Instruments (TXN), Microchip Technologies (MCHP) and Analog Devices (ADI) are other options. Park, however, doesn’t see potential fits in STMicroelectronics (STM.France) or Infineon Technologies (IFX.Germany).
All those companies sell more than just automotive semis, but cars are a big end-market for chip companies. Roughly 10% of NXP’s revenue, for instance, comes from German auto-parts company Continental AG (CON.Germany). Infineon generates about 10% of sales from Continental, Robert Bosch, and Denso (6902.Japan), combined.
Any deal would be big. The average market capitalization of the six potential targets mentioned is about $68 billion. It seems more big chip deals are happening these days though. In 2020, Nvidia (NVDA) bid about $35 billion for ARM. Advanced Micro Devices (AMD) offered $33 billion for Xilinx (XLNX) and Analog Devices bid $20 billion for Maxim Integrated Products (MXIM).
Park, for his part, doesn’t cover the U.S. semiconductor companies. He covers Asian stocks, and rates Samsung shares Buy.
His comment isn’t impacting the potential targets in Tuesday trading, and shares of the six are down about 2.4% on average. The S&P 500 and Dow Jones Industrial Average, for comparison, are both down about 0.8%.
Write to Al Root at [email protected]
