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Samsung eyes Gorilla grip on supply chain

Oct 24 2013, 02:36 IST
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SummarySamsung Electronics moved to tighten its grip on vital electronics parts supplies as it looks to stay ahead of rival Apple

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 group’s 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 firm’s 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.

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