Samsung Electronics Chairman Jay Y. Lee arrives at the court in Seoul, South Korea, November 25, 2024. YONHAP NEWS AGENCY/VIA REUTERS
Major cleaning at Samsung Electronics, which is effectively entering a crisis management phase at the end of the year. Wednesday, November 27, the division of the South Korean giant dedicated to the production of smartphones and semiconductors announced a vast reshuffle of its management teamwith no less than seven changes of leadership and a stated objective: to return to the global race for microprocessors, a competition disrupted by the explosion of artificial intelligence (AI), and in which the conglomerate has been left behind.
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Among the most notable decisions are promotions within the “memory chip” and “foundry” activities. The nominations aim to “strengthen the company’s growth and future competitiveness, focusing on the semiconductor sector”explains Samsung in a press release.
This major upheaval comes after the announcement, in October, of disappointing results for Samsung. Although growing, these were below analysts’ expectations, and had given rise to an admission of failure by the company. “We apologize for causing concern with this performance which did not meet market expectations”said Jeon Young-hyun, then director of the semiconductor division of Samsung Electronics. He also assured that “the management [prendrait] its responsibilities and [s’assurerait] to take another leap forward”.
Weaknesses
To reassure investors, a share buyback program over the next twelve months was presented on Friday, November 15, for an amount of 10,000 billion won (approximately 6.8 billion euros). As of that date, Samsung Electronics stock had lost more than 37% of its value since the start of 2024.
However, it is not guaranteed that these measures fundamentally address Samsung’s weaknesses. The Korean was notably surpassed by its competitor – and compatriot – SK Hynix in the field of high bandwidth memory chips (HBM), used in AI. In order to increase its production volume of this type of product, Samsung has decided to convert a liquid crystal screen factory located in Cheonan, 80 kilometers south of Seoul, to make it a new semi-automatic production site. drivers.
The company is also struggling to compete with its Taiwanese neighbor TSMC to produce the most sophisticated chips. According to the Korea HeraldSamsung would even consider subcontracting part of its production to its rival, with a view to winning contracts with major clients such as Nvidia. According to Park Sang-wook, analyst at Shinyoung Securities interviewed by the Korea JoongAng Daily, “outsourcing the foundry activity to TSMC [pourrait] deal a serious blow to confidence [accordée à] Samsung, but it has no choice but to respond to its customers’ demands at the moment. »
