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Samsung Faces Shareholder Pressure Amid AI Struggles
Challenges in AI and Semiconductor Market
Samsung Electronics is facing tough questions from shareholders after failing to capitalize on the artificial intelligence (AI) boom. The company has struggled with weak earnings and declining share prices due to setbacks in advanced memory chips and contract chip manufacturing, areas where competitors have surged ahead.
Stock Performance and Shareholder Concerns
At the latest shareholder meeting, investors criticized management for the company’s poor stock performance. Samsung’s co-CEO and head of its semiconductor business, Jun Young-hyun, acknowledged these concerns, apologizing for the company’s missteps and pledging to catch up in the high-bandwidth memory (HBM) chip sector.
“We were late in reading the market trends and missed out on the early market as a result,” Jun admitted during the meeting.
To address stock performance issues, Samsung introduced a stock-based performance system for executives in 2023 and is considering extending the scheme to employees in 2024. Following these announcements, Samsung shares rose by 2.3% compared to the benchmark KOSPI’s 0.9% increase.
Comparison with Competitors
Samsung shares dropped nearly a third in 2023, reaching a four-year low in November, while rival SK Hynix saw a 26% increase. In response, Samsung launched a share buyback plan worth 10 trillion won ($7.2 billion) in November to boost investor confidence.
Plans for Future Growth
Co-CEO Han Jong-hee warned that 2025 would be a challenging year due to global economic uncertainties. To drive future growth, Samsung plans to pursue significant mergers and acquisitions (M&A) despite regulatory and geopolitical hurdles.
“There are difficulties in semiconductor M&As due to regulatory issues and various national interests, but we are determined to produce tangible results this year,” Han stated.
Internal Concerns and Market Position
An internal message from Chairman Jay Y. Lee highlighted concerns about Samsung’s market position, stating that the company has lost its technological edge across various business segments.
“It’s hard to see efforts being made to drive big innovation or tackle new challenges. There are only efforts to maintain the status quo rather than shaking things up,” Lee’s message revealed.
In recent years, Samsung has lost ground to TSMC in contract chip manufacturing and has faced increasing competition from Apple and Chinese smartphone makers.
Looking Ahead
With rising shareholder pressure, strategic M&A plans, and a renewed focus on AI-related chip advancements, Samsung faces critical decisions in 2024. Whether these measures will be enough to regain market leadership remains to be seen.
“Samsung Faces Shareholder Pressure Amid AI Struggles” “Samsung Faces Shareholder Pressure Amid AI Struggles” “Samsung Faces Shareholder Pressure Amid AI Struggles”