Samsung targeting tech of start-ups in the U.S.

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Samsung targeting tech of start-ups in the U.S.

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In a bid to secure growth, Samsung Electronics is injecting “American DNA” into its mergers and acquisitions (M&As) by actively seeking to buy start-ups in the United States.

Of the 11 companies that Samsung has purchased a share in or acquired completely in the last few years, seven were based in the United States. Industry insiders said that the tech giant is looking for new partners because of a shift in global information and communications technology (ICT) trends from device-centered to software-centered businesses like operating platforms and cloud services, areas in which U.S. companies are strong.

In the late 2000s, the targets of Samsung’s M&As were mainly related to semiconductors. But as the electronics industry is now putting an emphasis on connectivity, the company is moving to secure competitiveness in software.

“Our policy is to recruit global talents with capability regardless of nationality,” said an official from Samsung. “For our health care and smartphone business to be successful, we have to go through cloud services and Internet of Things [IoT], but it is difficult to find a company in Korea that has great potential in this area.”

Samsung’s purchase of SmartThings for $200 million in August is a good example of the company’s new focus. The U.S. start-up founded in 2012 develops platforms for IoT for smart home setups.

Using SmartThings, consumers can remotely control their electronic home appliances through a mobile app. The system supports more than 1,000 appliances, which shows that Samsung is becoming more open. The smart home system that Samsung has developed only supports the company’s own devices.

The April 2013 purchase of MOVL, a start-up known for developing multiscreen platforms and a smart TV app, was perceived as another move in the right direction. Samsung also bought employees and assets from Boxee, a video streaming start-up, in July last year and a video app developer Shelby this May, boosting its competitiveness in content development.

In order to accommodate talented employees in the United States, Samsung will expand its work facilities on the East Coast, while the West Coast is covered by the company’s Open Innovation Center in Silicon Valley.

In eastern United States, Samsung is set to open a marketing center in a six-story building in Manhattan’s Meatpacking District before the end of the year. The district is known as New York’s advertisement and media hub, and Google and Apple also have offices there. Samsung said that the center will be a place for its marketing employees to greet and talk with corporate customers in the United States.

Samsung is also reportedly seeking a new building for R&D in New York or New Jersey that can accommodate up to 7,000 employees.

As for concerns over whether the newly acquired companies can cope with Samsung’s corporate culture, the tech giant said it will give them more freedom and independence.

For instance, Samsung has kept SmartThings as an independently operated company within its Open Innovation Center, under its founder and CEO Alex Hawkinson.

“The acquisition of the company means that we are trying to secure the technology of that company and people who can develop and utilize the technology,” said a Samsung executive on the condition of anonymity “If talented employees leave after we buy it, then there is no meaning behind the acquisition.”

Samsung’s hunt for American software start-ups is likely to continue based on recent moves by Samsung Electronics Vice Chairman Jay Y. Lee, the son of Samsung Electronics Chairman Lee Kun-hee, who is currently hospitalized.

Lee met Microsoft CEO Satya Nadella in September and Facebook CEO Mark Zuckerberg in October, both in Korea.


BY JOO KYUNG-DON AND KIM YOUNG-MIN [kjoo@joongang.co.kr]

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