This article is so excellent that I wanted to share it, even though it’s from a media outlet I don’t particularly like.

“Samsung, once one of the most profitable companies in the world after Apple, has now fallen behind in competitiveness across all sectors. Even in its last stronghold, memory semiconductors, it is facing a significant crisis in regaining its competitive edge.”

Lee Seung-woo, head of the research center at Eugene Investment & Securities, who has been analyzing the semiconductor market for 25 years, said in an interview with Kyunghyang Shinmun on the 10th at Eugene Investment & Securities’ headquarters in Yeouido, Seoul, “The problem is that Samsung is no longer what it used to be.” He added, “If Samsung Electronics fails to regain its technological edge and internal conflicts worsen, it could face an even greater crisis.”

He pointed out, “It’s extremely painful that Samsung is trailing SK Hynix and Micron as a second-tier vendor in HBM. If Samsung stumbles further here, the outlook is bleak. Extraordinary measures are necessary.” The following are excerpts from the interview.

- Where does Korea’s semiconductor industry currently stand?
“If we look at the entire semiconductor supply chain and calculate revenue, the U.S. accounts for about 40%, Taiwan for 22%, and Korea less than 10%. Realistically, Korea’s revenue is about half of Taiwan’s. That reflects Korea’s current capabilities. Our semiconductor industry is not as strong as the government or the industry thinks. We are in a serious crisis, which essentially means Samsung Electronics is in trouble.”

- Where does Samsung Electronics stand?
“In 2018, when Samsung Electronics’ operating profit peaked, only three companies in the world earned more than Samsung: Saudi Aramco, Apple, and the Industrial and Commercial Bank of China. Even Microsoft and Google were behind Samsung. But that was the peak. Since then, Samsung has rapidly lost competitiveness, and now it has fallen behind in every business sector.”

- Samsung Electronics’ preliminary results for the fourth quarter of last year also fell short of expectations.
“Failure to respond in the HBM segment dealt a blow to its memory semiconductor business, and in non-memory (foundry), Samsung faced poor yield rates and failure to secure clients, leading to massive losses. In particular, the non-memory sector has accumulated about 8 trillion won in losses over the past two years. Samsung Electronics had announced plans to become the world’s number one in non-memory by 2030 and made significant investments, but no results have materialized. It was like pouring water into a bottomless pit.”

- Why is Samsung’s foundry less competitive?
“I’ve long argued that if Samsung really wants to succeed in the foundry business, it should separate the foundry business. Foundry is a customer service business, and conflicts with clients are inevitable. But Samsung didn’t do that and failed strategically. Instead of securing strong clients and then backing them with technology, Samsung focused only on visible technologies like ‘3nm.’ In 2011, Samsung manufactured all of Apple’s products, but Apple switched to TSMC, stating, ‘We don’t compete with our clients.’ TSMC continued working with the world’s top semiconductor companies, improving yields, while Samsung’s yields, having lost clients, declined further. Yield improvement is crucial. Samsung must stick to it until it gets better.”

- Why did Samsung’s stock price plummet in the second half of last year, contrary to the securities firms’ earlier projections of ‘100,000 won per share’ in the first half?
“Samsung had said it would succeed in HBM and that it would pass NVIDIA’s quality tests and start supplying products by the third quarter at the latest. In the end, it didn’t happen. People expected Samsung to deliver, based on its past reputation, but it failed to keep its promises. There were also issues with DRAM itself, such as overheating due to design flaws. At the time, foreign investors sold off their shares, causing the stock price to drop.”

- Isn’t China’s Changxin Memory Technologies (CXMT) catching up quickly in the HBM segment?
“Ten years ago, China announced plans to raise its semiconductor self-sufficiency rate to 70%. Currently, it’s only at 15-20%, slightly higher than a decade ago. Still, the reason we’re wary of CXMT is that, frankly, Samsung is no longer as dominant as it once was. Many other industries are also in a serious crisis. China will continue catching up. They’ve already overtaken Korea in secondary batteries, and they’re the global leader in renewable energy. The same goes for petrochemicals and steel. Korea is facing very tough challenges.”

I completely agree. It’s an excellent piece.

You can read the full article here.