Samsung Electronics, the world's largest memory manufacturer, is facing fierce competition in the semiconductor field, Samsung has been mired in the litigation of the group's leader Lee Jae-yong in the past 7 years, and the global foundry leader TSMC has consolidated its leading position during this period, and the American giant Intel (Intel) and the Japanese semiconductor manufacturer Rapidus have also developed rapidly with the strong support of **.
Industry insiders pointed out that Samsung needs to attract customers such as Nvidia, AMD and Qualcomm to gain market share, but this is not an easy task, because TSMC maintains a close relationship with these companies, and Samsung must show competitiveness in terms of technology and cost to win these customers.
Intel announced in 2021 that it would return to the foundry business and is currently building factories in Arizona, Ohio, New Mexico, Oregon and other states in the United States. Given Intel's expertise in semiconductors, the company can't underestimate its goal of surpassing Samsung and TSMC by 2025, people familiar with the matter said.
Japanese chip makers have also reinvigorated, with Japan** offering huge subsidies to help memory chip maker Kioxia build a factory. The chip national team Rapidus has cooperated with Dutch semiconductor equipment manufacturer ASML to start pilot production of 2nm chips by 2025.
Samsung aims to become the world's largest manufacturer of memory chips and system semiconductors by 2030, but it has a bumpy road ahead of it due to fierce competition from rivals. According to independent financial analyst Dan Nystedt, in US dollar terms, TSMC's revenue in 2023 will reach $69.3 billion, surpassing Intel's 542$300 million with 509900 million US dollars, becoming the world's largest semiconductor manufacturer.
Memory slowed down and market value plummeted.
The 2010s were a time of Samsung's glory, with the company surpassing Intel in market capitalization in 2011 to become the global semiconductor market leader. In 2012, it ranked 5th among global IT companies by market capitalization, alongside giants such as Apple and Microsoft.
But since the political scandal broke in 2017, everything has changed. While other tech companies are soaring in market value, Samsung is stagnating. TSMC surpassed Samsung in market value in 2019, followed by Nvidia overtaking in 2020, and now Samsung's global market capitalization ranking has fallen out of the top 20. As of February 16, Samsung's market capitalization was about 3,651400 million US dollars, TSMC market capitalization reached 6570600 million US dollars, and Huida has rushed to 179 trillion dollars.
Industry trends have also changed, such as the slowdown of the memory chip market in recent years, and the rise of AI concept stocks. However, experts also blame fundamental factors for Samsung's declining competitiveness, a big reason behind which is the inability of the top management to make critical decisions in turbulent times amid litigation. At the same time, competitors such as Apple, Google and Nvidia are actively investing and making mergers and acquisitions, while Samsung's M&A activity is not very busy.
Lee Jae-yong was involved in a girlfriend political scandal and was absent from Samsung's decision-making.
Industry insiders pointed out that the only person who can make decisions for the next 10 to 20 years is the chairman, however, Samsung's absence has led to obstacles in exploring future business opportunities. After Lee Jae-yong's judicial risk is cleared, the shareholder return policy and major M&A activities are re-promoted, and the stagnant stock price is expected to regain momentum.
In 2017, Lee Jae-yong, who is still the vice chairman of Samsung, was involved in the scandal of Park Geun-hye's girlfriend in politics before South Korea, and was released on parole in August 2021 after being imprisoned twice for crimes such as bribery and misappropriation. After Yoon Suk-yeol took office in 2022, he announced an amnesty for Lee Jae-yong, and in October of the same year, Lee Jae-yong officially took over as chairman of Samsung Group. Despite the pardon, Lee had to go to court one or two times a week.
In September 2020, Lee Jae-yong was prosecuted by the prosecutor for a 2015 merger and acquisition case worth US$8 billion (about NT$253.4 billion), involving improper transactions and stock price manipulation, and asked for a sentence of 5 years in prison and a sentence of 500 million won (about NT$1,286.).50,000 yuan), and the Seoul court acquitted the court in the first instance on February 5, and the prosecutor immediately appealed.
Industry sources point out that Samsung still faces an upcoming appeal and other ongoing trials on unfair business practices allegations, but as of now, the huge legal burden has been lifted, and Samsung should be able to handle more pressing business issues.
Since 2017, Samsung has not made any major acquisitions.
Experts mentioned that if Samsung wants to compete fiercely in the world, the head is bound to lead in the front. Cho Dae-gon, an associate professor in the Department of Business at the Korea Advanced Institute of Science and Technology (KAIST), pointed out that in today's technology industry, from Jensen Huang of Nvidia to Elon Musk of Tesla to Mark Zuckerberg of Meta, we can see the impact of decisive managers on companies, and to effectively adapt to the rapidly changing competitive landscape and market trends, a streamlined decision-making structure and strong execution capabilities are required.
Kim Joung-ho, a professor in the Department of Electrical Engineering at the Korea Advanced Institute of Science and Technology, emphasized the importance of managers being proactive. In an era where competitiveness can be lost in an instant, the top management must take a challenging perspective, knowing that there is no such thing as always the first, and that it can become the second at any time, which will require a corresponding change in the corporate culture.
Many experts believe that large-scale mergers and acquisitions, bringing in talent, major investments and improving the corporate culture are Samsung's top priorities. Since acquiring Harman, a major audio and automotive equipment manufacturer in 2017, Samsung has not made any major M&A deals in recent years. Ahn Joon-mo, an associate professor at Korea University's Department of Public Administration, said that despite the emergence of new areas in the industry, such as cloud computing and artificial intelligence, big tech companies are expected to continue to dominate because tech giants continue to gain access to talent and technology through mergers and acquisitions of promising startups and competitors, and Samsung should adopt such a strategy.
Park Jae-keun, president of the Korean Society of Semiconductor and Display Technology, said that compared with competitors such as TSMC, Samsung has both memory chip and foundry businesses, so it also needs a wider range of cross-disciplinary professionals.
Some believe that while promoting mergers and acquisitions, new areas should be explored, rather than expanding into traditional businesses such as semiconductors and smartphones. Lee Jeong-dong, a professor at the Institute of Technology Management, Economics and Policy at Seoul National University, pointed out that the world's leading companies should focus on blazing new trails rather than being at the forefront of established routes such as semiconductors.
Behind TSMC, Samsung is struggling to catch up.
The report released by the Federation of Korean Industries (FKI) in 2022 also pointed out the difficulties faced by South Korean semiconductors to catch up with Taiwan, and according to the data at that time, Taiwan's gross domestic production in 2021 was 789.5 billion US dollars, less than 1 of South KoreaHalf of the $79 trillion, however, there are a number of world-class semiconductor companies in Taiwan, including foundry leader TSMC, UMC (2303), IC design giant MediaTek (2454), etc.
According to the statistics of that year, Taiwan's revenue exceeded 1 billion US dollars (about NT$314.).500 million yuan) has 28 large semiconductor companies, while South Korea has only 12. According to another report released by FKI, among the world's top 100 semiconductor companies by market capitalization, South Korea has only three, including Samsung Electronics, SK hynix and SK Square, which is also behind Taiwan's 10.
The think tank report also mentioned that due to high corporate tax rates, rising labor costs and talent shortages, Samsung is in a difficult situation and lags behind TSMC. The report pointed out that Samsung is trying its best to expand overseas business in order to surpass TSMC, but without ** support, all this will be in vain. The report stresses that the growth of South Korean companies in the face of fierce global competition will depend on the speed and extent of policy measures.