It was reported on the 17th that the head of South Korea's Samsung Electronics stated that the Samsung Group is at a critical juncture of survival and death, urging top executives to fight a desperate battle.
According to people familiar with the matter, since the end of last month, the Samsung Group has organized training for more than 2,000 executives from subsidiaries such as Samsung Electronics. During the training, a video about the group's business philosophy was played, emphasizing the need for a strategic transformation of Samsung Electronics.
Based on the information conveyed in the video, the head of Samsung said that the group has lost its internal driving force and is at a critical juncture of survival and death. A profound self - reflection should start from the top management. He said that what matters is not the current crisis situation, but the attitude towards dealing with the crisis. Even if it means sacrificing immediate interests, investment should be made for the future.
It is reported that Samsung is under pressure from domestic and foreign competition in the field of artificial intelligence chips. Especially in the high - bandwidth memory (HBM) business, it lags behind its domestic rival.
The head of Samsung called on executives to fight for survival and gave each participating executive a crystal plaque with a message on it.
Since the end of last month, the Samsung Group has held a seminar named "Rebuilding Samsung's Strength" for more than 2,000 executives from all subsidiaries at the Yongin Training Institute in Gyeonggi - do, South Korea. The group also held several seminars for executives with the theme of "Restoring the Education of Samsung's Spirit and Values".
The video played at the seminar shared the business philosophies of the late founder and the late former head of the group. There was also a message from the current head, although according to those present, he did not appear in the video, only his voice was heard.
The head rebuked the executives present, saying, "Samsung is facing a matter of survival. The management must deeply reflect on their actions. There must be an attitude of fighting to the death to meet the challenges of the AI era."
He also said, "What matters is not the crisis situation, but our attitude towards dealing with the crisis. Even if it means sacrificing immediate profits, we should invest for the future." It is reported that he also emphasized the importance of technology.
In addition, each executive who participated in the seminar received a business - card - sized crystal plaque engraved with a message from the head, asking them to be "Samsung people who are strong in crisis, reverse in adversity, and tenacious in competition".
As Samsung lags behind its competitors in chips, South Korean netizens call for replacing the head.
At the beginning of this year, Samsung Electronics released its quarterly report for the fourth quarter of 2024. The operating profit for that quarter was 6.5 trillion won (about 32.5 billion yuan), lower than the average analyst estimate of 8.96 trillion won. The revenue was 75 trillion won (about 375 billion yuan), also lower than the market expectation.
Currently, in the field of artificial intelligence chips, especially in high - bandwidth memory (HBM), Samsung is facing challenges from its competitor and is in a lagging position. The market shares of its main businesses, including TVs, smartphones, and dynamic random - access memory (DRAM), also declined last year. According to the latest business report, Samsung Electronics' global market share of TVs decreased from 30.1% in 2023 to 28.3% last year, the smartphone market share dropped from 19.7% to 18.3%, and in the dominant DRAM field, the market share also decreased from 42.2% to 41.5%.
It is reported that analysts believe that Samsung has been slow to respond in the competition of the AI era, and its traditional businesses such as smartphones continue to decline. It is expected that the profit margin will be further squeezed in the future. Analysts predict that Samsung Electronics' operating profit in the first quarter of 2025 may decline by 22.5%.
Previously, the head of Samsung's chip division admitted that the company had delays in obtaining certification from a major company and needed to review its organizational culture and processes. Due to the lack of certification, Samsung's market share in high - bandwidth memory (HBM) has decreased. In February this year, the head went to California, the United States, to meet and talk with the founder and CEO of the relevant company.
Notably, during the ten - year period when the current head has been the de - facto leader of Samsung, the return on equity of Samsung Electronics has been continuously declining, and it has even been ridiculed as an "inefficient dinosaur". This represents a gradual decline in Samsung's competitiveness and has led to overseas investors selling their shares in Samsung.
Especially during the current AI boom, unlike other competitors making huge profits, Samsung's performance expectations have been on a downward trend. Its average return on equity (ROE) in the next 10 years is between 12.6 - 12.8%, while that of another company is between 23.6 - 27.3%. The gap between the two companies has widened from 4.5 percentage points in the past to 14 percentage points.
In September last year, Samsung Electronics formulated a lay - off plan, and the lay - off ratio in some overseas departments will be as high as 30%.
On social platforms and popular South Korean forums, South Korean netizens have called on the Samsung Group to replace the current head and use professional managers to replace the family - controlled chaebol model.