Samsung increases stake in Rainbow Robotics

Samsung Electronics has acquired more shares in robotics company Rainbow Robotics to strengthen its presence in the growing robotics market.

Rainbow Robotics reported Wednesday that CEO Oh Jun-ho and other stakeholders sold their combined 4.8 percent stake in the company to Samsung for 27.8 billion won ($21.2 million). In addition to its 10.22 percent stake acquired in January, Samsung now owns a total of 14.99 percent of Rainbow Robotics' shares, making it the company's second-largest shareholder.

On Thursday, shares of Rainbow Robotics closed at 112,300 won, up nearly 30 percent from the previous day. Rainbow Robotics is one of a handful of robotics companies making bipedal human-like robots here.

The latest purchase gives Samsung the right to appoint a board member. The tech company also signed a deal to secure call options under which it could buy 855,439 shares of Rainbow Robotics over the next 6 years. If Samsung exercises this right, it could take control of the robot maker, and its stake would likely rise to as much as 60 percent - and at a fixed price lower than the current stock price.

Rainbow Robotics was founded in 2011 by a research team at the Korea Advanced Institute of Science and Technology Humanoid Robot Research Center. The company launched on the country's Kosdaq technology exchange in February 2021.

Samsung prepares for the future

When Samsung first acquired shares in Rainbow Robotics, Han had said there were no intentions other than to invest in the partner company. "We have acquired shares in Rainbow Robotics. There is nothing more than that," Han had said in January on the sidelines of the world's largest consumer electronics show in Las Vegas.

On Wednesday, March 15, 2023, Samsung's co-CEO Han Jong-hee emphasized the company's vision for robotics at the company's annual shareholders meeting in Suwon, Gyeonggi Province. "We will take precautionary measures to prepare for the era of robots that will fully unfold in the future," Han said."We will strengthen core technologies necessary for various types of robots and develop more products that can provide convenience to customers. "It is true that robotics is one of our future growth drivers. The EX1 human assistant robot will be introduced this year. We will share more details when we are ready," he added.

Stock analysts say the latest deal shows Samsung could consider acquiring the local robotics maker in the future.

Samsung sees robotics as an important factor for future growth and is preparing for "golden times." Elon Musk recently took a similar view, seeing robotics as more significant than car manufacturing in the long term.

Automation in Samsung's factories ?

"The additional stock purchases indicate that Samsung may consider acquiring Rainbow Robotics, depending on the results of their technology collaboration," said Yang Seung-yoon, a senior analyst at Eugene Investment and Securities.

Details on why Samsung Electronics is investing in Rainbow Robotics were not disclosed. But the reason could be that Samsung wants to advance the company's automation with Rainbow Robotics' robots, and the two companies are collaborating to produce robots together. In terms of automation, Samsung would have a similar goal to Foxconn, a company where Samsung also has manufacturing done. That's because Foxconn is a major shareholder in Agile Robots and hopes to automate its previously extremely manual manufacturing.