Samsung Electronics has promised angry shareholders it will pursue “meaningful achievements” in deals this year to revive growth after the South Korean tech giant suffered market share declines across all its core businesses in 2024.
About 900 individual and institutional investors gathered at the company’s annual meeting in Suwon, south of Seoul, on Wednesday, unhappy with the company’s shares losing almost a fifth of their value over the past year despite a global boom in demand for artificial intelligence-related hardware that has boosted its competitors.
Co-chief executive Han Jong-hee issued Samsung’s latest apology for its weak performance, admitting to shareholders that its technological competitiveness had weakened in recent years.
“There are some difficulties in doing semiconductor M&As due to regulatory issues and various national interests, but we’re determined to produce some tangible results this year,” he said, as he pledged “meaningful” action to achieve growth through deals.
The gathering highlighted growing pressure from shareholders — about 40 per cent of South Korean retail investors hold Samsung shares — for more decisive action in pursuing acquisitions and responding to the looming threat of US tariffs on foreign semiconductors.
“Samsung is not reading the technology trend well, with no business insight. There has been no major decision-making on the M&A front,” said one investor at the meeting. “Please become a global tech leader again.”
Lee Jae-yong, the billionaire scion of Samsung’s owner family, recently told executives that the company was in a “do-or-die situation”, which he described as a “question of survival” after the company reported its first broad market share decline in a decade.
Its share in Dram memory chips slipped from 42.2 per cent to 41.5 per cent, while market share in smartphone shipments fell from 19.7 per cent to 18.3 per cent, according to its annual report released last week.
Display panels for smartphones suffered the biggest drop, from 50 per cent to 41.3 per cent, while its TV market share fell from 30.1 per cent to 28.3 per cent under intensifying pressure from Chinese rivals. In-car technology products by its subsidiary Harman saw their market share fall from 16.5 to 12.5 per cent.
“What matters is not the crisis itself, but our attitude in dealing with it,” Lee told executives. “We must invest in the future even if it means sacrificing immediate profits.”
Investor complaints have focused on Samsung’s underperformance in advanced memory chips, as it lags smaller rivals SK Hynix and Micron Technology in the high-bandwidth memory (HBM) products used in AI hardware.
The company has reorganised its team of engineers to strengthen its HBM competitiveness but is yet to pass the qualification test needed to supply cutting-edge memory products to AI chip giant Nvidia.
“We are accelerating technology development not to repeat our past mistakes,” said Jun Young-hyun, head of Samsung’s chip division, on Wednesday.
Samsung’s foundry business, which makes chips for external customers, is also suffering billions of dollars of losses as it struggles to close its growing technology gap with main rival Taiwan Semiconductor Manufacturing Company.
Samsung announced last year it would build a foundry for cutting-edge logic chips, or processors, as part of a $40bn investment in Texas that would also include facilities for the “advanced packaging” of AI chips.
But Macquarie analysts have since warned of the possibility that the $17bn foundry in Taylor City could be a “big stranded asset” due to a lack of clients.
A person familiar with Samsung’s foundry operations said it was caught in a “vicious circle”, whereby a poor yield rate at its US foundry was making it hard to secure big orders, which in turn was making it harder to improve the yield rate, or the proportion of usable chips produced at the latest miniaturisation levels.
“We’ll try to improve our profitability by further developing process technology and addressing yield problems in advanced nodes,” said Han Jin-man, head of the company’s foundry business. “Customers want not just logic wafers but also memory technology. We are the only company that can offer a holistic solution.”
Samsung also has to grapple with President Donald Trump’s threats to impose tariffs on imported chips and to scrap the $52bn Chips Act, under which the US is supposed to provide the company with $4.75bn in subsidies for building the Taylor plant.
TSMC has responded to the threats by announcing a $100bn investment plan to expand its existing capacity in the US, raising the question of whether Samsung is willing or able to follow suit.
Samsung investors have also been discomfited by open speculation by Trump officials that the Taiwanese chip giant could help run fabrication plants for Samsung’s other main rival Intel.
“It is not good news for Samsung as competition will intensify if Intel’s foundry plants become as efficient as TSMC’s,” said Ahn Ki-hyun, an executive at the Korea Semiconductor Association.
“Turning around Intel will be challenging, even for TSMC, but things are not getting better for Samsung as the company is reducing its capital spending on foundry while cutting its engineering resources,” said Macquarie analyst Daniel Kim.
At the annual meeting, the company pledged to expand investments in robotics, medical technology and next-generation semiconductors for AI-driven growth. An upturn in the memory chip cycle is also expected to boost Samsung’s earnings in the second half.
Some investors said a more radical shake-up of the company’s rigid management structure was required, noting that Lee continued to exercise his grip over the company’s hierarchy despite not having a position on the company’s board.
“Lee Jae-yong can influence the board as a large shareholder, but he should not be involved in the company’s management,” said Chan Lee, a managing partner at Petra Capital Management, a Seoul-based hedge fund and Samsung investor.
“He should give more power to CEOs with engineering backgrounds, just as his father did,” he added. “But instead we have seen top managers with financial backgrounds stressing short-term profits at the expense of long-term competitiveness.”
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