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Samsung eyes 'meaningful' M&A deals over next three years

South Korean tech giant's profit jumps 26% in Q4 as leader starts jail term

Samsung has enjoyed strong demand for memory chips and displays amid an economic rebound since the middle of 2020.   © Reuters

SEOUL -- Samsung Electronics said on Thursday that it is eyeing "meaningful" mergers and acquisitions in the next three years despite its de facto head, Vice Chairman Lee Jae-yong, returning to prison last week to serve a two-and-half year sentence.

"We are positive we can execute M&As of meaningful sizes during this business term," CFO Choi Yoon-ho said in the company's fourth-quarter earnings call, referring to the period between 2021 and 2023. "The increasing cash is a burden on the company. We will do our best to reduce such a risk."

Samsung's cash and cashable assets, such as short-term bonds and long-term deposits, reached 124.7 trillion won in December, up from 112.2 trillion won a year ago. The company has been under pressure from shareholders to invest in more profitable businesses at a time when interest rates remain extremely low.

The announcement comes just days after Lee said the company should push ahead with investments and job creation regardless of his situation. Lee was sentenced to two and half years in prison on bribery and embezzlement charges last week. During Lee's absence, Samsung will be run by three professional CEOs in charge of the semiconductor, mobile and home appliance businesses.

The company also said it expects Intel's plan to expand production outsourcing will increase demand for chip foundry services overall, but declined to confirm whether Samsung itself has won orders from the U.S. company. Chip foundries make semiconductors for other companies.

Samsung further said that it is considering sites for expanding its foundry facilities, and that the most promising locations are Hwaseong and Pyeongtaek in South Korea and Austin, Texas, although the company stressed that nothing has been decided yet.

Strong display and memory chip sales boosted Samsung Electronics' operating profit by more than 26% in the fourth quarter as the South Korean tech giant continues to enjoy strong earnings amid the pandemic.

Samsung said Thursday that its operating profit jumped 26.4% to 9 trillion won ($8 billion) in the October to December period from a year ago, as its revenue climbed 2.8% to 61.6 trillion won. Its net profit also soared 26.4% to 6.6 trillion won during the same period.

The world's largest smartphone and memory chip maker attributed this to strong sales in display panels and memory semiconductors. The display panel business posted 9.9 trillion won of revenue, with 1.8 trillion won of operating profit in the fourth quarter.

"The display panel business recorded its highest-ever quarterly earnings, thanks to an ongoing recovery in demand for smartphones and TVs, amid an economic rebound during the second half of 2020," the company said in a statement. "Overall demand in the memory business was strong, led by continued strong mobile demand, as well as solid demand from data centers and PCs."

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