South Korean giant Samsung Electronics is purchasing UK’s struggling chipmaker CSR’s mobile technology development business in a £198 million deal.
Samsung has announced that it will buy the CSR’s mobile business in cash. The acquisition further strengthens Samsung’s focus on it’s component business. The mobile business division’s profit fell by half in the first quarter and Kwon Oh-hyun was recently appointed as the company’s chief executive.
What does Samsung get from the deal? Transfer of 21 US chip patents, royalty-free license to CSR’s patents in WiFi and Bluetooth connectivity and location services, a stake of 4.9 percent in CSR’s division which makes chips for television and audio devices.
Why was CSR’s mobile business struggling? The mobile division of CSR suffered a £10 million loss in the first quarter, shares have fell more than half the value and a market capitalisation of £434 million. CSR’s last year’s acquisition of US chipmaker Zoran for £309 million has written the bad fate of the UK chipmaker.
CSR, however, has a highly reputed strong market position in Global Position System and Bluetooth chips, which makes an ideal buy for Samsung. Also, the new signing has shown positive effects in the shares of the company and has gone up by 40 percent.
In a twisted tale of partnerships, Apple is the biggest semiconductor customer of Samsung. However, the two giants have locked horns in the tablet and smartphone market, which has affected Samsung’s chip business. The CSR mobile division acquisition will give Samsung new customers for it’s chip business and help to leverage the current war with Apple.