Samsung CEO says company considering deals as it struggles for growth

Samsung CEO says company considering deals as it struggles for growth

  • 19.03.2025 04:21
  • thehindu.com
  • Keywords: AI, Market Share Loss

Samsung's CEO acknowledged the company's growth struggles, particularly in semiconductors, and hinted at potential mergers and acquisitions to address shareholder concerns amid declining stock performance compared to competitors.

Apple NewsNVDAsentiment_neutralAAPLsentiment_neutral
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Estimated market influence

Samsung Electronics

Negativesentiment_dissatisfied
Analyst rating: N/A

Struggling with growth, weak earnings, sagging share prices; failed to ride AI boom; lost market share to SK Hynix and TSMC; considering M&A deals.

SK Hynix

Positivesentiment_satisfied
Analyst rating: N/A

Gained market share in semiconductors, shares climbed 26% last year.

Nvidia

Nvidia

Neutralsentiment_neutral
Analyst rating: Strong buy

Relies on SK Hynix for HBM chips.

Apple

Apple

Neutralsentiment_neutral
Analyst rating: Buy

Gained market share in smartphones.

TSMC

Neutralsentiment_neutral
Analyst rating: N/A

Gained market share in contract chip manufacturing.

Context

Analysis of Samsung's Growth Challenges and Strategic Shifts

Key Facts and Data Points

  • Date: March 19, 2025
  • Shareholder Concerns: Weak earnings and sagging share prices due to failure to capitalize on the AI boom.
  • Lee's Suggestion: Focus on memory chip or foundry business for growth.
  • Internal Admission: Samsung has lost ground in semiconductors, particularly in high bandwidth memory (HBM) chips, where SK Hynix leads.
  • Leadership Statements: Co-CEO Han Jong-hee announced plans for "meaningful" mergers and acquisitions (M&A).
  • Share Performance:
    • Samsung shares dropped by nearly 30% last year.
    • SK Hynix shares climbed by 26% in the same period.
  • Market Share Losses:
    • Lost ground to TSMC in contract chip manufacturing.
    • Faces competition from Apple and Chinese smartphone rivals.
  • Share Buyback Plan: Launched a $7.2 billion buyback plan, leading to a 7% share price increase post-launch.
  • Market Capitalization: $235 billion, accounting for 16% of South Korea's main bourse.
  • Investor Ownership: Nearly 40% of South Korean investors own Samsung shares.

Market Trends and Business Impact

  • Semiconductor Industry: Samsung is struggling to compete with SK Hynix in HBM chips, a critical component for AI graphic processing units.
  • AI Boom Missed Opportunity: Samsung's failure to ride the AI wave has hurt its stock performance compared to peers like NVIDIA and SK Hynix.
  • Economic Uncertainties: 2025 is expected to be challenging due to economic policy uncertainties in major economies.

Competitive Dynamics

  • Rivalry with SK Hynix: Samsung lags behind SK Hynix in HBM chips, a key area for AI growth.
  • Contract Chip Manufacturing: Losing market share to TSMC.
  • Smartphone Market: Faces competition from Apple and Chinese brands.

Strategic Considerations

  • Mergers and Acquisitions (M&A): Samsung is exploring "meaningful" M&A deals to drive growth and innovation.
  • Memory Chip Focus: Internal suggestions to prioritize the memory chip or foundry business for excellence.
  • Shareholder Expectations: Shareholders are demanding clearer strategies for innovation and growth, not just maintaining the status quo.

Long-Term Effects

  • Innovation Lag: Samsung's inability to drive big innovation could hinder long-term growth in a rapidly evolving tech landscape.
  • Market Leadership: Regaining lost ground in semiconductors will require significant strategic shifts and investments.

Regulatory Impacts (if relevant)

  • No direct mention of regulatory impacts in the text, but future competition in semiconductors may be influenced by global trade policies and technology regulations.