Thursday, May 23, 2013

Samsung buys a 10 percent stake in rival South Korean device maker Pantech

The question that arises from this Wednesday report is the following: Now that Samsung has purchased 10 percent of Pantech, its rival South Korean mobile device maker, does this mean we have to add 10 percent of Pantech's devices to Samsung's total when calculating its global market share?

Tongue-not-in-cheek-wise, Samsung has confirmed the deal. The Korean giant -- the largest mobile device maker in South Korea, by far, paid $48 million for that minority stake in Pantech, which is the country's third-largest mobile device manufacturer. LG is the second largest.

Samsung said:
Samsung Electronics has agreed to acquire a 10-percent stake in Pantech, valued at approximately KRW 53 billion (approx. $48.5 million). The investment is aimed at solidifying our relationship with Pantech, a key component customer of Samsung. Samsung will have no involvement in Pantech’s business management in any way or form.
It's true that Pantech -- like Apple -- spends a lot on Samsung components. In 2012, Pantech reportedly spent about $211 million to purchase Samsung components that it used in its own devices.

With the deal, Samsung is now Pantech’s third-largest stakeholder. It trails only chip-maker Qualcomm -- which makes the processor in Samsung's latest flagship phone, the Galaxy S4 -- which owns 11.96 percent of Pantech, and the Korea Development Bank, which owns 11.81 percent.

In March, Samsung made another major investment. It agreed to spend about $112 million for a 3.08 percent share of Sharp. While that was a rather minor investment, it reportedly raised red flags in Cupertino, Calif., as Apple is believed to buy about a third of its LCD panels from Sharp.

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