Samsung eyes Gorilla grip on supply chain

Written by Reuters | Seoul | Updated: Oct 24 2013, 08:06am hrs
Samsung Electronics moved to tighten its grip on vital electronics parts supplies as it looks to stay ahead of rival Apple with new products in a fast-changing technology industry.

The South Korean groups unlisted Samsung Display unit could become the biggest shareholder of Corning, the maker of scratch-resistant Gorilla Glass used in many mobile gadgets, as part of a deal in which Corning buys Samsung Display out of a 1995 joint venture making glass for liquid crystal displays.

That deal includes a new 10-year LCD glass supply agreement between New York-based Corning and Samsung Display, which makes LCD panels for tablets and TVs for Apple, Sony and Lenovo Group. Corning said the deal would add about $2 billion to its annual sales.

As part of the agreement, Samsung Display will receive new convertible preferred shares in Corning worth $1.9 billion, and will invest another $400 million by subscribing to new convertible preferred shares. If the preferred shares are converted, Samsung Display would become the US firms biggest shareholder, with a 7.4% stake.

The deal follows a series of bolt-on acquisitions by Samsung Group firms in recent months as it muscles deeper into key supply chains and positions itself for technology shifts.

By moving beyond a simple glass supply alliance, Samsung is trying to take a longer-term view for its future product pipelines as Corning has vast technologies not just in displays but in other emerging areas, said Brian Park, an analyst at Tongyang Securities.