Samsung Electronics has pledged to unhappy shareholders to make “significant progress” this year in striking growth-enhancing deals, after the South Korean tech giant lost market share across all of its key businesses in 2024.
About 900 individual and institutional investors gathered for the company's annual general meeting in Suwon, south of Seoul, on Wednesday, expressing dissatisfaction with the fact that the company's shares have lost almost a fifth of their value over the past year despite a global boom in artificial intelligence equipment.
Co-CEO Han Jong-hee apologized to shareholders for Samsung's poor results, admitting that the company's technological competitiveness had weakened in recent years.
“ There are some difficulties in carrying out mergers and acquisitions in the semiconductor sector due to regulations and national interests, but we are determined to achieve concrete results this year, ” Jong-hee said, pledging “significant” efforts to drive growth through acquisitions.
The meeting underscored growing pressure from shareholders — about 40% of South Korean retail investors own Samsung shares — for the company to take more aggressive action on acquisitions and respond to the threat of U.S. tariffs on foreign semiconductors.
A “to be or not to be” situation
Lee Jae-yong, a billionaire heir to Samsung’s family, recently told the company’s management that it was in a “make or break situation,” which he described as “a matter of survival,” after Samsung reported its first market share decline in a decade. He added: “ What matters is not the crisis itself, but our approach to solving it. We have to invest in the future, even if it means sacrificing immediate profits . ”
The company's share of the DRAM memory market fell from 42.2 percent to 41.5 percent, and in the smartphone market from 19.7 percent to 18.3 percent, according to its annual report released last week.
The biggest drop was in smartphone displays , down from 50% to 41.3%. The TV market share fell from 30.1% to 28.3% under increasing pressure from Chinese competitors. Harman’s automotive products saw their market share fall from 16.5% to 12.5%.
photo: RYO Alexandre / shutterstock
Investor complaints center on Samsung's weak performance in the advanced memory segment, as it lags behind smaller rivals like SK Hynix and Micron Technology in high-performance memory (HBM) used in artificial intelligence equipment.
The company has revamped its engineering team to bolster its competitiveness in HBM, but it still has not passed the qualification tests required to supply modern memory chips to AI giant Nvidia.
Problems in the foundry segment and pressure from the US
The Financial Times reports that Samsung's foundry unit, which makes integrated circuits for external customers, is suffering billions in losses as it fails to close the widening technology gap with its main rival, Taiwan Semiconductor Manufacturing Company (TSMC).
Samsung announced last year that it would build a plant to make advanced logic chips, or processors, as part of a $40 billion investment in Texas that also includes facilities for “advanced packaging” of AI chips.
However, Macquarie analysts have warned that the $17 billion Taylor City foundry could become an “expensive, underutilised asset” due to a lack of customers .
The Financial Times quoted a person familiar with Samsung's foundry operations as saying the company was stuck in a “vicious cycle”: low yield rates (the percentage of chips that are usable) at its U.S. fab made it difficult to win large orders, which in turn made it even harder to improve.
Samsung also faces threats from President Donald Trump to impose tariffs on imported integrated circuits and to eliminate the $52 billion Chips Act, under which the U.S. would provide Samsung with a $4.75 billion subsidy to build a plant in Texas.
TSMC has responded to these threats by announcing a $100 billion investment plan to expand its U.S. production capacity, raising questions about whether Samsung will be able to take similar action.
Samsung investors are also concerned about speculation from Trump administration officials that the Taiwanese semiconductor giant could help run manufacturing plants for Samsung's main competitor, Intel.
Ahn Ki-hyun, director of the Korea Semiconductor Association, said: “ This is not good news for Samsung as competition will intensify if Intel's foundry plants reach the same performance as TSMC. “
During the AGM, Samsung pledged to increase investment in robotics, medical technology and next-generation AI-powered semiconductors. An improved business cycle in the semiconductor memory industry is also expected to boost the company's profits in the second half of the year.
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