What Display Daily Thinks: Samsung is fighting a bigger battle than just displays, the goal of taking its massive semiconductor business to the next level in the face of increasing competition and jockeying by world powers for silicon manufacturing and IP. And all the vertical integration, which is a strength of the company, can also weigh down its ability to move quickly.
What’s happening now is typical of a corporate narrative that is driven by uncertainties arising from macroeconomic issues. That means that every division has to adapt to the unique pressures on its business and wants to be free to make moves that are unique to its business. LG has made a statement about what it intends to do to adapt present market environments, and that may put pressure on Samsung to do the same. Samsung isn’t agile, but there are good reasons for that.
Samsung Faces Challenges in Challenging Business Environment
Samsung Electronics is encountering obstacles amidst a demanding business landscape. The Korea Times is writing that concerned voices among insiders and experts are talking about the need for the company to avoid complacency once, noting that the company’s valuation has suffered in recent years.
Samsung’s vertically-integrated business structure, encompassing consumer electronics, displays, telecom equipment, and chips, provides an opportunity for synergy among its key sectors. This cohesive approach allows the company’s affiliates to collaborate on new technologies and incorporate them into their products. While Samsung did not pioneer the smartphone, its ability to develop transformative technologies and swiftly adopt them has been a defining factor in its success.
In the highly competitive TV and smartphone markets, Samsung often releases its own versions shortly after sector leaders. This strategy has proven effective, thanks to the company’s vertically-integrated structure, which enables it to anticipate market trends in popular tech products. Critics argue that the tech industry now favors interconnected software and software-hardware systems, but Samsung’s fast-follower strategy, fueled by creativity and skill, remains viable without significant risks.
However, Samsung’s semiconductor business has faced challenges, with an estimated operating loss of 8 trillion won in the first half of this year. This contrasts sharply with the early 2010s when the company remained profitable despite market turmoil during the Asian financial crisis.
While Samsung currently controls nearly 50 percent of global memory chip consumption, it is now adjusting its production levels, leading to concerns about its price bargaining power. Some industry insiders suggest that the company’s desire for coexistence and stability with competitors, including SK and Micron Technology, may have weakened its position in memory chips.
To maintain its competitive edge, Samsung is being encouraged to embrace agility at scale, fostering an innovative environment that empowers employees to pave the way for future success. With its aim to become the global leader in contract manufacturing by 2030, the company must stabilize the production yields of cutting-edge logic chips below the 5-nanometer tech level. Non-memory semiconductors, critical for artificial intelligence, data sciences, and quantum computing, hold increasing strategic importance in the $580 billion semiconductor market. TSMC, the global leader in this sector, manufactures only client-specific custom chips, unlike Samsung.
Samsung’s profit in smartphones and appliances is anticipated to worsen, further adding to the challenges the company faces. Insiders urge management to adopt measures that combat obstacles to business agility, enabling the tech giant to remain flexible and responsive.
