Semiconductor Hegemony War... "Lee Jae-yong Must Show Ruthless Determination"

The Economist Special Feature... "Time for Proactive Management Moves"

[Image source=Yonhap News]

[Asia Economy Reporter Jeong Hyunjin] The British economic magazine The Economist analyzed in a special report that as the global semiconductor hegemony war intensifies, Samsung Electronics needs Vice Chairman Lee Jae-yong’s active management efforts to leap to the top position in system semiconductors. The publication, which focused on Samsung Electronics’ current status and future challenges, diagnosed that amid a complex business structure and U.S.-China conflicts, Vice Chairman Lee should seek change through large-scale facility investments and mergers and acquisitions (M&A) to aim for cutting-edge semiconductor dominance.

On the 18th, The Economist published an article titled “Samsung Electronics Aims for Cutting-Edge Semiconductor Hegemony,” stating, “Samsung is entering an ‘important and new era’ in its history.” The magazine emphasized that “Vice Chairman Lee was released in August and has fully succeeded in management following the late Samsung Chairman Lee Kun-hee,” and that he plans to elevate system semiconductors to a market-dominant position alongside memory semiconductors and smartphones, where Samsung currently holds the top spot.

The Economist analyzed that the semiconductor sector is the area Vice Chairman Lee places the greatest emphasis on within Samsung Electronics’ business fields, actively engaging in advanced process development and attracting new customers. Through this, Samsung aims to secure about a 40% market share in the foundry sector, competing shoulder-to-shoulder with Taiwan’s TSMC and the U.S.’s Intel in one of the world’s most strategically important industries, similar to its position in memory semiconductors. The magazine noted, “Although Vice Chairman Lee is known for being reluctant to step forward, he will need to demonstrate a ruthless side to achieve success.”

There remain challenges Vice Chairman Lee must address to implement his plans. The Economist pointed out that due to Samsung Electronics’ culture prioritizing hardware, there is a need to improve software and service sectors. Additionally, the market has raised concerns about conflicts of interest arising from Samsung’s complex business structure, which encompasses both set businesses like smartphones, TVs, and home appliances, and component businesses such as semiconductors and displays, suggesting that the independence of the foundry business should be strengthened. At the same time, with the U.S. and China embroiled in a “technology hegemony” conflict, Samsung faces the mission of devising a survival strategy amid this tension. Furthermore, concerns over a downturn in the memory semiconductor market have led to undervaluation of Samsung’s stock price, which is another challenge Vice Chairman Lee must tackle.

The Economist viewed Vice Chairman Lee’s challenge as a significant factor not only for Samsung but also for South Korea and the semiconductor industry. The magazine reported, “Vice Chairman Lee has shown a clear will to accelerate changes at Samsung Electronics.” It also mentioned M&A as one of the ways to drive Samsung’s transformation, forecasting, “Considering Vice Chairman Lee’s preferences, the possibility of bold investments in software and services is low, but there may be investment opportunities in the semiconductor sector.”