Samsung Takes a Stake in Component Customer (And Competitor) Pantech

A second-tier player in the handset industry, South Korea’s Pantech has been having a tough time of it, competing with the likes of Samsung and LG. The company, which was delisted back in 2007 because of persistent capital erosion, posted a massive annual net loss of 188 billion won last year. And earlier this year it negotiated a deal with Qualcomm to convert its debt to the semiconductor company into enough equity to raise Qualcomm’s stake in Pantech to 13.49 percent from 11.46 percent.

So Pantech’s announcement today that it had sold off another 10 percent of itself is hardly surprising. What is surprising, however, is the name of the buyer: Samsung. The South Korean company is spending about $47.6 million to become Pantech’s third-largest shareholder.

An interesting investment, considering that Samsung and Pantech compete not only in the smartphone market, but in the tablet market, as well. But Samsung insists that the deal is more about the chips and displays that Pantech buys from it than anything else. “The investment is aimed at solidifying our relationship with Pantech, a key component customer of Samsung,” the company said in a statement. “Samsung will have no involvement in Pantech’s business management in any way or form.”