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Samsung buys 10% stake in smartphone manufacturer Pantech

Think of South Korean smartphone manufacturers, and LG and Samsung may pop straight into your head. But there is a third, lesser known company called Pantech, and Samsung just dropped 53 billion won (around £31.5 million) to acquire a 10% stake in the company. The creator of the Galaxy S4 said in a statement that deal is an investment “aimed at solidifying our relationship with Pantech.”

Why would Samsung make an investment in Pantech when the company is a rival? For one, Pantech buys up a lot of smartphone components from Samsung. The Next Web reports that Pantech has paid 235 billion won (around £139 million) to Samsung just for smartphone components. From Samsung’s point of view, Pantech is a valued customer.

Samsung also has cash to burn right now, with reserves only rising from sales of the popular Galaxy series of Android smartphones. The Wall Street Journal recently revealed that even after stripping away debts, Samsung is sitting on a 31.2 trillion won (around £18.8 billion) cash mountain. Samsung has the means and reasons to invest in Pantech right now, so why not?

The deal does raise some anti-competitive concerns, yet Samsung quickly pointed out in a statement that it wouldn’t interfere with Pantech’s management “in any way or form.” We’ll have to wait and see if the South Korean regulatory bodies are happy with that, but at least samsung isn’t Pantech’s biggest shareholder. Qualcomm owns a 11.96% stake in the company, and the Korea Development Bank also holds 11.81%.

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