Lenovo Reportedly Circling Samsung’s PC Unit

Samsung Electronics Co. may exit the global personal computer market by selling its flagging PC business to Lenovo Group Ltd., a South Korean media outlet reported Friday.

Negotiations between the two companies have been underway for several months, the online business news website Jong reported. The proposed deal could be worth more than 1 trillion won ($849 million), the report said.

A spokesperson for Lenovo said the company does not respond to market rumors. Samsung could not be reached for comment.

"The deal would make total sense," said Fang Xingdong, who heads the Beijing technology think tank China Labs. "The PC is a sunset industry, and Lenovo is the only company that’s making any money (from them). Samsung would reasonably want to shrug off this burden to focus on smartphones."

Samsung controls no more than 4% of the global market for PCs, and its share is shrinking, IDC research manager Jacky Zhao said.

Analysts say China’s Lenovo — the world’s largest PC maker — is eagerly seeking new markets and opportunities for innovation.

"Samsung PCs actually enjoy good brand reputation in Vietnam and Indonesia, and the acquisition will give Lenovo better access to these markets," said business strategist Zhou Zhanggui, a columnist for the Chinese edition of the British newspaper Financial Times.

"Gobbling up these smaller players is the most efficient way for Lenovo to secure its advantage," Zhou said. "Samsung has solid infrastructure technology and is a leader in display panels."

Samsung does not report separate financial results for its PC arm, nor has the company described how much PC sales contribute to its consumer electronics business, for which sales fell 7% year-on-year in the third quarter. 

The report included comments from a former Samsung executive who said the company’s withdrawal from the PC market would not be surprising, given the close ties between its PC and printer businesses. In September, Samsung sold its printer business to HP Inc. in a deal valued at $1.05 billion.

"Samsung knows it doesn’t have much of a chance in PCs with its current market status," said IDC’s Zhao. "Chipping away this non-core division will let Samsung focus on its advantages."

Contact reporter April Ma (fangjingma@caixin.com); editor Eric Johnson (ericjohnson@caixin.com)