Deep cleaning at Samsung Electronics, which at the end of the year will effectively enter a crisis management phase. On Wednesday, November 27, the division of the South Korean giant dedicated to the production of smartphones and semiconductors announced a broad reorganization of its management team, with no less than seven changes of bosses and a declared objective: to return to the global race for microprocessors, a competition disrupted by the explosion of artificial intelligence (AI), and in which the conglomerate has been left behind.
Among the most notable decisions are promotions within the “memory chip” and “foundry” activities. The nominations are intended “strengthen the growth and future competitiveness of the company, focusing on the semiconductor sector”explains Samsung in a press release.
This big shock comes after the announcement, in October, of disappointing results for Samsung. Although growing, they were below analysts’ expectations and had led to an admission of failure by the company. “We apologize for causing concern with this performance that did not meet market expectations”said Jeon Young-hyun, then head of Samsung Electronics’ semiconductor division. He also assured that “the management [prendrait] their responsibilities and [s’assurerait] take another leap forward”.
Weaknesses
To reassure investors, a share repurchase program for the next twelve months worth 10 billion won (approximately €6.8 million) was presented on Friday, November 15. As of that date, Samsung Electronics shares had lost more than 37% of their value since the beginning of 2024.
However, it is not guaranteed that these measures will fundamentally address Samsung’s weaknesses. The Korean company was notably surpassed by its competitor – and compatriot – SK Hynix in the field of high-bandwidth memory chips (HBM), used in AI. To increase its production volume of this type of products, Samsung has decided to convert a liquid crystal display factory located in Cheonan, 80 kilometers south of Seoul, to convert it into a new production center for semi-automatic controllers.
The company is also struggling to compete with its Taiwanese neighbor TSMC in the production of the most sophisticated chips. According to the Herald of KoreaSamsung would even consider outsourcing part of its production to its rival, with a view to obtaining contracts with large clients such as Nvidia. According to Park Sang-wook, an analyst at Shinyoung Securities interviewed by the JoongAng Korean Newspaper, “Subcontract foundry activity to TSMC [pourrait] deal a serious blow to trust [accordée à] Samsung, but it has no choice but to respond to the demands of its customers at this time. »
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