Chemtronics Backs Out of Wi-Fi Deal with Samsung
On 10-16-20 we mentioned that Samsung Electro-Mechanics (009150.KS) had agreed to sell its Wi-Fi module business to Chemtronics (089010.KS), after selling its wireless charging business to Chemtronics earlier last year. The Wi-Fi business at SEMCO has been working under very low margins (~1% - 2%) and therefore fell under SEMCO’s guidelines of selling any business that did not generate substantial margins, such as the camera module line. That said, there had been some question about the value of the division, which we believe was set at $130m by SEMCO but was likely closer to $95m when the agreement was signed.
It seems that Chemtronics has decided to cancel the deal, which SEMCO agreed to, also returning the purchase deposit. While details of the cancellation were not made public, Chemtronics indicated that “Fast changes in the Wi-Fi module market” were the cause for the cancellation, although Chemtronic’s expectations that they would be able to bring Wi-Fi module margins to over 10% were likely more of a factor, with a change in Samsung Electronics’ plans probably the root cause of reduced expectations. SEMCO’s return of the CHemtronics deposit would seem to indicate there was more than just a change in the overall Wi-Fi market, and something more internal to Samsung Electronics, who would have been Chemtronics primary customer.
It seems that Chemtronics has decided to cancel the deal, which SEMCO agreed to, also returning the purchase deposit. While details of the cancellation were not made public, Chemtronics indicated that “Fast changes in the Wi-Fi module market” were the cause for the cancellation, although Chemtronic’s expectations that they would be able to bring Wi-Fi module margins to over 10% were likely more of a factor, with a change in Samsung Electronics’ plans probably the root cause of reduced expectations. SEMCO’s return of the CHemtronics deposit would seem to indicate there was more than just a change in the overall Wi-Fi market, and something more internal to Samsung Electronics, who would have been Chemtronics primary customer.
RSS Feed