Against the backdrop of Intel’s failures, Samsung Electronics still retains its status as the largest manufacturer of semiconductor products, but this company has long been unable to boast of success in its usual areas of activity. Samsung’s management even promised shareholders to demonstrate significant results in the area of transactions with other market players this year.
Image Source: Samsung Electronics
Last year, Samsung’s own positions were declining in all major segments of its presence on the global market, but at a shareholders’ meeting on Wednesday, the company’s management promised investors that it would take the most decisive steps to return the business to growth. Participants in the meeting were also upset by the decline in Samsung Electronics’ capitalization by almost one-fifth based on the results of last year. Competitors such as SK hynix, meanwhile, managed to make good money amid the AI boom, supplying specialized accelerators with their expensive and sought-after HBM memory family.
One of the company’s two CEOs, Han Jong-hee, even apologized to shareholders for the company’s less-than-successful financial performance last year, acknowledging that Samsung Electronics’ technological competitiveness has declined in recent years. “There are certain difficulties in the semiconductor market due to regulatory restrictions and national interests, but we are determined to deliver significant results this year,” the CEO explained, while also declaring the company’s readiness to achieve growth through market deals.
Samsung Electronics shares are quite popular in the South Korean stock market, as about 40% of local retail investors have them in their portfolios. Some of them sincerely believe that the business can grow rapidly through mergers and acquisitions.
The company’s formal chairman and founder’s grandson Lee Jae-yong previously told Samsung Electronics executives that the fate of the company depends on their decisive action, and it is literally a question of the company’s survival. Samsung Electronics’ annual report released last week showed that the company’s share of the DRAM memory market fell from 42.2% to 41.5%, while its position in the smartphone segment weakened from 19.7% to 18.3%, and in the LCD panel market for smartphones, Samsung’s share fell from 50% to 41.3%. The TV segment showed a decline from 30.1% to 28.3%, and even in the automotive electronics segment, the Harman division lowered the bar from 16.5% to 12.5%.
«”It’s not the crisis itself that’s important, but the attitude towards overcoming it. We must invest in the future, even if it means sacrificing immediate profits,” Lee Jae-yong said.
Image Source: Samsung Electronics
Investors are also focusing on Samsung’s problems in marketing its HBM3E memory, as competitors have been able to sell it more successfully. Samsung’s semiconductor chief Jun Young-hyun admitted this week: “We are accelerating technology development to avoid repeating the mistakes of the past.”
Samsung is also struggling in the contract chip manufacturing business. A major project to build new factories in Texas has run into trouble finding potential customers, who are put off by rumors of quality problems with Samsung products. Without enough customers, there is no point in investing in more expensive manufacturing facilities in the U.S.
Samsung’s contract business head Han Jin-man said, “We will try to improve profitability by improving process technology and solving product quality issues in advanced lithography. Customers want not only logic wafers, but also memory. We are the only company that can offer a complete solution.”
At a shareholder meeting, Samsung Electronics executives pledged to invest more in robotics, medical technology and next-generation semiconductors for the growing AI industry. A recovery in the memory market in the second half of the year should also benefit Samsung.
Some experts say the company suffers from Lee Jae-yong’s management style, which does not give Samsung’s divisional directors the freedom his father did. Instead, the company’s management prioritizes short-term financial gain over building the business’s long-term competitiveness.