Samsung will rely on mergers and acquisitions to deal with the pursuit of Chinese companies| yue reading the world

Reading Global(2022.01.10)

【Samsung will rely on mergers and acquisitions to cope with the pursuit of Chinese enterprises】

Nihon Keizai Shimbun reported on the 10th that in order to carry out business structure reform, Samsung Electronics will promote mergers and acquisitions. The reason is that despite the excellent performance of the semiconductor business, Samsung still maintains the highest earnings in the manufacturing industry, but the stock market requires the company, which has 11 trillion yen in cash, to improve its capital efficiency. In the hardware business, competition with Chinese companies is inevitable. What one Samsung executive said was a "recent" merger that will play a key role in the company's growth.

According to South Korea's SK Securities, the semiconductor division accounts for 57% of Samsung's operating profit. On the other hand, with the exception of the mobile phone sector, which has become a revenue pillar like the semiconductor sector, the home appliances and displays sectors have grown weakly due to the catch-up of Chinese companies. This means that Samsung's dependence on semiconductors is very obvious.

The stock market sees Samsung's reliance on semiconductors as a risk. In August 2021, the signs of uncertainty in the memory market intensified, and Samsung's stock price fell sharply. Li Chengyu, chief analyst of Youjin Investment Securities, pointed out that "if Samsung wants to further increase its stock price, it needs to reform the business structure that has remained unchanged for more than 10 years."

Samsung is also aware of this concern and has begun to take action. In January 2021, Samsung's Chief Financial Officer (CFO) said that "meaningful mergers and acquisitions will be implemented in the next 3 years", announcing that it will actively seek mergers and acquisitions. As of the end of September, Samsung's cash assets have accumulated to 120 trillion won, and investment banks and other banks have made a number of merger proposals to it.

Samsung is a super-large enterprise with sales of 27 trillion yen, mainly semiconductors, mobile phones, home appliances, and displays. Most of the previous mergers and acquisitions were to supplement existing businesses such as software technology, production bases, and sales channels, and rarely carried out large-scale mergers and acquisitions that the market required to adjust the business structure.

【LG Energy: The company's market share will catch up with the Ningde era】

Yonhap News Agency reported that LG Energy Solutions representative director and vice president Quan Yingshou said on the 10th that the company's power battery orders in hand are more than the Chinese battery giant Ningde Times (CATL). In the long run, the market share is expected to catch up with the Ningde era.

Quan Yingshou made the above statement when answering questions at the initial public offering (IPO) online press forum on the same day. LG Energy Solutions disclosed on the same day that the company is currently supplying volkswagen, GM, Tesla, Audi, Hyundai, Ford, Volvo, Porsche and many other global OEMs, and the total number of orders in hand this year has reached 260 trillion won (about 1.38 trillion yuan).

Quan Yingshou said LG Energy Solutions has an overwhelming intellectual property advantage over competitors. Different from the NINGDE era, the company has a diversified customer base in the world, and the production base in Europe, the United States and China is also a major advantage. Since Chinese car companies use local batteries according to the policy, it is not difficult to increase sales in the Ningde era, but to become a global company, it is necessary to attract customers in Europe and the United States, but this is not an easy task.

When asked how to compete with local manufacturers such as China and CATL, Quan Yingshou said that it is said that the Chinese government will no longer provide financial subsidies for local battery manufacturers from 2023, and the company will cooperate with a local company this year and will actively explore the Chinese market in the future. Kwon said the company is also involved in the lithium iron phosphate (LFP) project, which is led by Chinese companies, giving priority to its application to energy storage systems (ESS) and considering it in the field of power batteries.

LG Energy Solutions began developing batteries in 1992 and, as of the end of the third quarter of last year, had a 24% share of the global ev vehicle battery market, and a share of 44% and 29% in Europe and the United States, leading the way. Quan Yingshou said that the challenges and innovations accumulated for more than 30 years have finally borne fruit of the IPO, and the listing will take the first step in planning the company's century-old future.

【Ferrari launches new management team to meet electrification challenges】

Reuters reported that Ferrari's new CEO announced a new organizational and leadership change on the 10th aimed at strengthening its technical focus and the uniqueness of its products, as the luxury sports car manufacturer is transitioning to electrification.

Benedetto Vigna, a technology industry veteran and former top executive at chipmaker STMicroelectronics, took the role of CEO of Ferrari in September with the task of propelling Ferrari into a new era of cleaner, silent and connected mobility.

Ferrari said in a statement that functions including "product development and research and development", "digital and data" and "technology and infrastructure" will now report directly to the CEO.

As part of the reform, the company appointed Gianmaria Fulgenzi, who has been with Ferrari since 2002 and most recently as head of supply chain for its racing division.

Ernesto Lasalandra was employed by STMicroelectronics as Ferrari's Chief R&D Officer.

Silvia Gabrielli joined Ferrari from Microsoft in 2019 and was appointed Chief Digital and Data Officer to drive "the digital transformation of the entire company, ensuring more data-driven and digitized processes." ”

Ferrari also hired Angelo Pesci from STMicroelectronics, where he worked for more than 20 years in financial planning, supply chain and product planning, service and operations. He was appointed Chief Purchasing and Quality Officer at Ferrari.

Ferrari said in a statement that "the new organizational structure will further promote innovation, optimize processes and strengthen internal and external collaboration with partners and suppliers." ”

Why do video game developers see the huge potential of blockchain, but their new NFT is facing problems? 】

Forbes reported on the 10th that in December last year, Ubisoft released a limited edition NFT in the military shooter game Ghost Recon Breakpoint, which should have been a watershed moment: the French company became the first large game publisher to add NFTs in the game, which may herald a huge shift in the use of blockchain technology in games.

But the reality is the opposite, it is a dramatic mistake, and the negative feedback from the market comes quickly. Players complain that they need to play 600 hours of the game (24 hours a day, almost a month) to get a free item – a costumed helmet for the character. Attempts to increase revenue are even more frustrating: One report said only 15 NFTs for the game were bought, for a total value of $400.

John Linden, CEO of Blockchain Platform Developer Musical Games, said: "It's a half-hanger approach," saying the key to NFT's success is to fully integrate it into the game's native economy so users can reap the benefits of the game.

In the blockchain gaming approach, virtual props in video games — such as collectibles, weapons, and fancy skins — are real-world assets, similar to stocks or bonds, that exist in the form of NFTs. Since NFTs are stored on the blockchain (a public, decentralized ledger), it gives consumers the "right to transfer" to control their own virtual assets.

The biggest difference between blockchain and traditional games is control. Publishers cannot delete blockchain assets by shutting down a game or deleting a game feature. The NFT items in the game can exist beyond the life of the game, and can preserve value as long as there is a demand.

But blockchain gaming still has a lot to work out. Some full blockchains require more electricity than some countries, put pressure on the environment, and charge fees in the form of "petrol fees" (or fees for users to use the network). The game money-making model in which players gain and lose assets raises the question of whether gambling laws should apply. In other apps, groups of users pool their money together to buy a single, expensive asset that could one day clash with global securities regulators. In addition, tokens and currencies in games that correspond to real-world assets have also raised concerns about market manipulation and other possible violations of securities regulations.

Companies such as EA Sports and Zynga see blockchain as a potential conduit for new revenue from global games. Market research firm Fortune Business Insights predicts that the global gaming industry will generate more than $200 billion in revenue in 2020. According to DappRadar, game-related NFTs generated $4.8 billion in revenue in 2021, accounting for about 20 percent of total annual NFT sales, including hit games like NBA Top Shot, CryptoPunks, and Board Ape Yacht Club.

(This article is compiled from Nihon Keizai Shimbun, Yonhap News Agency, Reuters, Forbes)

Economic Observation Network intern reporter Zhou Yuqing sorted out