Competitiveness and deregulation matter
Published: 09 Oct. 2024, 20:25
According to its earnings guidance for the third quarter, Samsung Electronics’ revenue added 6.66 percent to a new historic high of 79 trillion won. But its operating profit fell below expectations at 9.1 trillion won, off 12.84 percent from the previous quarter. Shares further tanked as the estimate of the profit missed the downgraded outlook of around 10 trillion won. Foreign investors also turned net sellers. Amid the gloomy signs, the market cap of the chip giant has dwindled to the lowest level in two years.
Samsung Electronics — which took the lead in memory production and raised the bar in chip technology for decades — has been hammered for its slow response to the AI-led revolution. The company has been stumbling behind its domestic rival SK hynix in the high bandwidth memory (HBM) chip race. The company’s scheduled delivery of HBM chips to Nvidia is also delayed.
Chinese rivals have also challenged Samsung Electronics’ unrivaled standing in the conventional DRAM memory market. Some even predict that Samsung’s top position in the category can be toppled soon. The company’s performance in the foundry market is no different. Samsung’s advance in the market still dominated by Taiwan’s TSMC has been making little progress. TSMC with 62.3 percent market share has widened its gap with Samsung Electronics with 11.5 percent market share in the on-demand chip market to 50.8 percentage points during the second quarter.
Given its weight in the Korean economy, Samsung Electronics’ woes spell trouble for the economy. The company must do its utmost to combat the headwind.
“We will rearm ourselves with a challenger spirit to go higher, as we can only prove ourselves with differentiated novel technology and perfect competitiveness,” said Jun Young-hyun, vice chairman of the device solutions division of the company. Samsung Electronics must hone competitiveness to defend its unrivalled position in the market through unceasing innovation.
The government and the National Assembly must provide all possible support for our companies by lifting excessive regulations on creating a massive chip cluster in Yongin city, Gyeonggi, and expedite the construction of infrastructure for the chip hub to help our struggling chipmakers survive and win in the cutthroat chip race.
with the Korea JoongAng Daily
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