Samsung Electronics, the world’s largest memory chipmaker, is navigating a tumultuous period marked by fierce competition and internal challenges. As its global rival, Taiwan Semiconductor Manufacturing Company (TSMC), continues to excel — particularly in the burgeoning AI semiconductor sector — Samsung faces a critical turning point. TSMC recently reported a staggering 54.2 percent growth in net profit for the third quarter, capitalizing on its dominant position in AI chip manufacturing. Its market capitalization has soared to US$1.67 trillion, placing it alongside firms like Nvidia that have surpassed the $1 trillion mark.
In stark contrast, Samsung has struggled to meet market expectations, particularly regarding its operating profit, prompting public apologies from its executives. The company’s stock price has dropped to around 59,000 won ($43) per share, as foreign investors have been steadily selling off their holdings since early last month. This decline reflects broader concerns about Samsung’s abi
lity to maintain its leading position in an increasingly competitive landscape.
The escalating international chip war has intensified competition among countries. Samsung now finds itself caught in this rivalry, as declining demand for its primary product — DRAM chips — raises concerns about a potential “semiconductor winter” or a period of economic downturn or stagnation in the memory chip industry. Compounding this issue, Chinese companies are swiftly advancing their technological capabilities in the semiconductor industry. For instance, Morgan Stanley forecasts a downturn in the memory sector, primarily due to waning demand for conventional DRAM and a potential oversupply of high bandwidth memory (HBM). Chinese manufacturers, like CXMT, are expected to produce over 10 percent of the world’s DRAM this year, challenging the traditional dominance of Samsung, SK hynix and Micron.
The implications of this crisis are particularly dire for Korea, where the chip industry is the cornerstone of the export-driven
economy and is closely tied to national security. Major powers, including the U.S. and China, are rushing to bolster their chip industries through extensive subsidies and regulatory measures. In response, the Yoon Suk Yeol administration has introduced a package of measures aimed at supporting the domestic semiconductor sector. However, many industry insiders argue that these measures are insufficient, providing only indirect assistance such as low-interest loans, rather than addressing the fundamental needs of the industry.
Historically, Samsung has thrived on bold investments and cutting-edge technology. Yet, the current crisis highlights an urgent need for introspection and reform within the company. Analysts point to internal factors as significant contributors to its struggles. Rather than pursuing innovative strategies, Samsung has adopted a more cautious approach focused on cost-saving measures. Critics within the company’s labor unions have raised concerns about a leadership culture they believe favo
rs individual gain over collective progress, describing the management style as authoritarian and lacking long-term vision.
In a recent public letter, Jun Young-hyun, head of Samsung’s chip division, acknowledged the company’s shortcomings, stating, “We have triggered concerns about our technical competitiveness with some forecasting the possible crisis facing Samsung.” However, mere acknowledgment is not enough. Samsung needs a comprehensive strategy to steer through this crucial period.
To regain its competitive edge, Samsung’s chairman, Lee Jae-yong, must step forward and articulate a new vision for the company, reminiscent of the leadership style of his father, Lee Kun-hee. The focus must shift toward developing state-of-the-art technology and attracting high-quality talent. Emphasizing long-term innovation over short-term performance will be crucial in securing Samsung’s position as a leader in the semiconductor industry.
The challenges facing Samsung Electronics are multifaceted, encompassing fierce
competition, shifting market demands and internal inefficiencies. As the semiconductor landscape evolves, Samsung must undertake drastic reforms and embrace a bold approach to innovation. The stakes are high, not just for the company but for Korea’s economy as a whole. Without decisive action and visionary leadership, Samsung risks losing its status as a global semiconductor powerhouse.
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Source: Yonhap News Agency
