[Hyundai, Samsung, and Chinese Robot Dog Competition] Samsung Also Covets... Robot Dog Armed with Core Technology

①Samsung Secures Call Option with Rainbow Robotics... M&A Possibility Also Considered

Editor's NoteIn the 1980s and 1990s, Hyundai and Samsung fiercely competed as the top two conglomerates in South Korea's business world. However, their business domains were distinctly different. Samsung focused on fast and lightweight electronic products, known as gyeongbak danso (輕薄短小). In contrast, Hyundai was characterized by heavy, large-scale products, with ships and automobiles as the group's flagship items. Entering the 1990s, this division began to blur. Hyundai Electronics (now SK Hynix) started mass-producing semiconductors. Samsung Motors (now Renault Korea) SM5s ran alongside Hyundai Sonata cars on the roads. Just before these two companies were about to engage in an all-out battle to defend and seize market share, the IMF crisis struck. Samsung had to give up automobiles, and Hyundai had to relinquish semiconductors. Now, 30 years later, the two companies are preparing for another showdown, this time staking their pride on future core businesses.

Unlike in the past, this time it is not a battle of defense and offense. The current battlefield is the still unclaimed territory of robots. At this stage, the war for developing 'robot dogs'?quadruped robots that walk like dogs rather than bipedal robots that walk like humans?is just beginning. Another difference from the past is the presence of overseas competitors. Previously, Japan and Western advanced countries, which led in technology, were the rivals. This time, Chinese companies are holding Hyundai and Samsung back. China produces similar robot dogs at less than one-tenth the price. Hyundai, Samsung, and Chinese companies have started a fierce competition for dominance in the robot dog market.

Samsung Electronics, which has identified 'robots' as a future growth engine, has begun full-scale business expansion. It has consecutively acquired stakes in technologically capable robot companies, keeping the door open for mergers and acquisitions (M&A). This robot company was the first in Korea to develop bipedal robots and is currently producing military quadruped robots, commonly called 'robot dogs,' in collaboration with Hyundai Rotem. With the first robot launch scheduled within the year, attention is focused on how Samsung will continue to collaborate with this robot company.

On the 15th, Samsung Electronics purchased a 4.8% stake in Rainbow Robotics for 27.78365 billion KRW. This came three months after investing 58.98208 billion KRW on January 3rd to acquire 1,942,000 new shares. As a result, Samsung Electronics' stake in the company increased from 10.3% to 14.99%. On the same day, Samsung also secured call options (the right to purchase shares at a specific price) on all shares held by the largest shareholder and related parties. If Samsung exercises these call options, it could acquire a 59.94% stake and become the largest shareholder. Industry analysts interpret this as a clear indication of Samsung's intent to acquire Rainbow Robotics.

Rainbow Robotics was founded by researchers from KAIST's Humanoid Robot Research Center and possesses multi-legged robot platform technology. The company develops and supplies bipedal robots, quadruped robots, and collaborative robots, and was listed on the KOSDAQ market in February 2021. Last year, it turned a profit with an operating income of 1.3 billion KRW, reversing the previous year's losses, and its sales increased by 52% to 13.615 billion KRW. Net income also turned positive, recording 5.774 billion KRW.

Rainbow Robotics' greatest competitive advantage lies in its ownership of core technologies. Samsung Electronics is said to highly value the company's technological capabilities and human resources. Although there are much larger robot companies, many rely on external parts or software. Rainbow Robotics, however, manufactures most of its key components in-house and develops its own software.

Consequently, its production costs are significantly lower than those of other robot companies. A Rainbow Robotics representative explained, "Our internalization rate, meaning the ability to produce components ourselves, exceeds 80%," adding, "As a result, our manufacturing cost ratio is less than 50% compared to other companies." The reason the company is profitable despite relatively small sales is precisely because it owns these core technologies.

Currently, Rainbow Robotics generates revenue from its 'collaborative robot' business, which involves robots working alongside humans. However, the company is passionately focusing on producing quadruped 'robot dogs,' leveraging the parts and technological capabilities that created Korea's first bipedal robot, HUBO.

Rainbow Robotics' robot dog, tentatively called the 'RBQ series,' is characterized by proprietary technologies such as three hours of continuous walking, a walking control algorithm resilient to external shocks, and design optimized for Korean terrain.

Equipped with various sensors including LiDAR and cameras, these robots are expected to be used in diverse fields such as patrol and military applications. In fact, the company has partnered with Hyundai Rotem to develop multi-legged robots for counter-terrorism operations by 2024 and plans to supply prototypes including the robot body, mission equipment, and remote control devices to the army. Hyundai Rotem intends to use these robot dogs for remote control, deployment in rough terrain and obstacle zones, and equipment attachment/detachment such as robotic arms, remote weapon control devices, flashbangs, tear gas dispensers, and body temperature measurement devices.

Although Samsung Electronics entered the robot business later than its competitors, it plans to secure business competitiveness through Rainbow Robotics' technological prowess combined with Samsung's own know-how. Samsung has also announced plans to directly launch an assistive device robot named 'EX1' within the year. This robot is known to be specialized in 'senior care,' equipped with functions to assist elderly exercise.