Toward a stronger future

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Toward a stronger future

Market jitters about Samsung Electronics’ potential underperformance have turned into reality. The global IT powerhouse’s operating profits during this year’s third quarter have plunged to 4.1 trillion won ($3.85 billion), a 43 percent decrease compared to the second quarter and a stunning 60 percent drop compared to the same period last year, where 10.16 trillion won in profits was recorded.

The poor results stem primarily from sluggish sales of high-end smartphones - a major driving force behind the IT flagship’s remarkable growth in the past - and from Chinese companies’ growing competitiveness in mid- to low-price smartphones.

Samsung Electronics’ lackluster sales also coincide with the overall decline in the global competitiveness of Korean companies, who are giving way to their Chinese counterparts in general-purpose products without being able to develop a new value-added market of their own. That casts a shadow over the future of Korea’s iconic IT company.

A more serious challenge for Samsung Electronics comes from the ominous lack of opportunities to turn the situation around. The company seems to be increasingly losing momentum in leading the global market as a “first mover,” after failing to keep its strong leverage as a “fast follower” amid ever-fiercer competition in the global IT industry.

Of course, Samsung Electronics is well aware of the hostile international environment and seeks to rejuvenate its success by finding a breakthrough in the post-smartphone era while pursuing a reform of its corporate culture through multilateral mergers and acquisitions at home and abroad.

At the same time, Samsung Electronics has taken a significant step to reinforce its semiconductor production line, which helped mitigate the alarming losses in the mobile business sector. The company has announced that it will set up the world’s largest semiconductor production line in Pyeongtaek, southwest of Seoul, by investing a whopping 15.6 trillion won with the goal of maximizing its existing strength in the manufacturing area.

Samsung Electronics is the only company that has a totally integrated production system covering raw materials, parts, computer and communication equipment and home appliances. That has been one of Samsung’s strongest points. But it could also serve as a stumbling block to becoming an innovative first mover.

We look forward to Samsung Electronics’ successful re-emergence as a global leader in IT technology after fully taking advantage of its traditional strengths, as well as remedying its weak points.

JoongAng Ilbo, Oct. 8, Page 38

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