Samsung tipped to buy HP PC arm

Word on the street is that Samsung is investigating if it is a good idea to buy HP’s PC business.

Digitimes has heard that Samsung executives have been wining and dining HP notebook contractors Quanta Computer, Compal Electronics and Pegatron Technology.

The idea is that Samsung would outsource notebook orders through them. All three companies are based in Taiwan, while Samsung currently manufactures all of its computers in mainland China.

Digitimes sees this as Samsung looking for subcontractors as part of the outfit’s bid to take up HP’s PC business.”

It makes a lot of sense for Samsung. The outfit makes 10 million laptops annually but this is nothing in comparison to the 64 million PCs and 40 million laptops HP shipped last year.

Samsung can also make memory, hard drives, screens, batteries and other computer components and having control of HP’s PCs would give them a huge outlet for those products and plenty of opportunities to cut costs.

One of HP’s problems was that while it was making a five percent profit on its PCs it could not push the margins down any further. Samsung with all its products could create low-margin, high-volume hardware.

For a while HP has been rumoured to have been talking about an HP-Samsung deal. In fact HP had been talking about flogging its PC division since 2010. HP denied it and denied that Samsung was the most likely buyer.

Now that HP is supposed to be spinning off its hardware arm there are few companies who can actually afford to buy it, or see an advantage in doing so. Samsung has the cash and might be the only one who would want it.

Rivals who might be interested include Acer which has problems with its own falling PC shipments, Asus can’t afford it. MSI is too small to swallow such a big outfit. Lenovo doesn’t need HP’s PC arm and Sony does not want to be in the low-end PC business.

There was some traction in the rumour that someone outside the hardware market might be interested. Microsoft was named and shamed, but it is unlikely. Vole really has a poor relationship with hardware and it would be competing with its own customers. This only leaves Toshiba and Samsung.

Samsung is more likely to want HP’s laptop business as the PC market is still rubbish. Many see the future of the PC is in more mobile gear. If Samsung buys, then it will have to find something to do with the PC side of things. It might try to sell this off.  

It is all as we predicted two days ago.