Approval of Samsung Electronics – Rainbow Robotics Business Combination(2025.3.5)

- Focused and swift review of business combinations that enhance corporate innovation and industrial competitiveness

<Overview of the Business Combination>

The Korea Fair Trade Commission (Chairman Han Ki-jeong, hereinafter referred to as the "KFTC") has approved the business combination in which Samsung Electronics Co., Ltd. (hereinafter referred to as "Samsung Electronics") acquires an additional 20.29% stake in Rainbow Robotics Co., Ltd. (hereinafter referred to as "Rainbow Robotics"), making it the largest shareholder with a total 35% stake. The KFTC determined that the potential concern over market competition restriction is minimal and approved the transaction on March 5, 2025.

• (Before the notification) Samsung Electronics held a 14.71% stake in Rainbow Robotics.
• (Transaction details) Samsung Electronics acquired an additional 20.29% stake, resulting in a total of 35% ownership.

This business combination was pursued by Samsung Electronics as part of its strategy to enter the robotics industry. Rainbow Robotics possesses extensive experience in robot development, including the development of South Korea's first bipedal humanoid robot, along with essential technological expertise and key personnel. By integrating these resources with Samsung Electronics' AI and software technologies, the two companies aim to create synergies in the development of humanoid robots.

<Business Activities of the Companies Involved>

Rainbow Robotics is engaged in the production of industrial robots, which are utilized across various manufacturing sectors. Samsung Electronics primarily operates in the semiconductor manufacturing industry, producing memory semiconductors such as DRAM and NAND flash. Additionally, Samsung Electronics’ affiliate, Samsung SDI Co., Ltd. (hereinafter referred to as "Samsung SDI"), manufactures secondary batteries, including small-sized rechargeable batteries.

• DRAM is a volatile memory semiconductor that loses stored information when power is turned off. It is mainly used in PCs, mobile devices, and home appliances.
• NAND flash is a non-volatile memory semiconductor that retains stored information even when power is turned off. It is primarily used in USB drives, external hard drives, and SSDs.

<Market Definition and Type of Business Combination>

A horizontal combination occurs when competing firms that produce the same product merge, while a vertical combination occurs between companies operating at different stages of the production and sales process.

 

Since Samsung Electronics, Samsung SDI, and Rainbow Robotics do not produce the same products, a horizontal combination does not apply. However, since Rainbow Robotics uses DRAM, NAND flash, and small-sized secondary batteries in its industrial robots, the vertical combination aspect required evaluation.

 

Therefore, the relevant markets identified in this review include:

1. Industrial robot market (Rainbow Robotics),
2. DRAM market (Samsung Electronics),
3. NAND flash market (Samsung Electronics), and
4. Small-sized secondary battery market (Samsung SDI).

Since all of these products are subject to global competition, the geographic market was defined as the global market.

This transaction results in three vertical combinations between the industrial robot market and the three semiconductor and battery markets. The KFTC examined the impact of these vertical combinations on competition in the relevant markets.

• Vertical combinations under review:
  1. Industrial robot market (Rainbow Robotics) – DRAM market (Samsung Electronics)
  2. Industrial robot market (Rainbow Robotics) – NAND flash market (Samsung Electronics)
  3. Industrial robot market (Rainbow Robotics) – Small-sized secondary battery market (Samsung SDI)

<Review Findings>

The KFTC determined that the business combination poses minimal risk of restricting market competition based on the following factors:

1. Minimal risk of input foreclosure (restriction of supply to competitors):
   Even if Samsung Electronics or Samsung SDI were to stop supplying DRAM, NAND flash, or small-sized secondary batteries to Rainbow Robotics’ competitors or increase their prices, these competitors could still procure substitute products from other suppliers.
   • DRAM and NAND flash are widely available products, and other major semiconductor companies besides Samsung Electronics offer similar products, allowing robot manufacturers to secure alternative supplies.
   • The market share of Samsung SDI in small-sized secondary batteries is approximately 15.83%, meaning robot manufacturers can easily switch to batteries from other suppliers.
2. Low incentive for input foreclosure:
   • Various semiconductors beyond DRAM and NAND flash are used in robot manufacturing.
   • Small-sized secondary batteries are mainly used in mobile robots and are not essential components for all industrial robots.
   • Given the rapid advancements in industrial robotics, it is in Samsung Electronics’ and Samsung SDI’s best interest to maintain relationships with as many customers as possible to sustain demand for their semiconductors and batteries.
3. Minimal risk of customer foreclosure (restriction of suppliers' market access):
   • Rainbow Robotics holds only a 0.07% market share in the global industrial robot market.
   • DRAM, NAND flash, and small-sized secondary batteries are used across various industries beyond robotics.
   • Even if Rainbow Robotics exclusively sourced its supplies from Samsung Electronics and Samsung SDI, other semiconductor and battery manufacturers could continue selling their products to other robot manufacturers and industries.

<Expected Benefits and Future Plans>

This business combination demonstrates the KFTC’s commitment to conducting focused and expeditious reviews of transactions that promote corporate innovation and industrial competitiveness while posing minimal competitive concerns.

 

The transaction is expected to enhance the competitiveness of South Korea’s robotics industry, which is currently dominated by companies from Japan and Germany. It presents an opportunity for South Korean firms to make significant advancements in the global industrial robotics market.

 

Moving forward, the KFTC will continue to closely review business combinations that drive innovation and industrial growth, while promptly approving cases with minimal competitive concerns to support the development of an innovative industrial ecosystem.