In the face of the absence of the imprisoned Lee Jae-yong, who is seen as the de facto head of the Samsung group, and growing competition in the semiconductor industry from other countries, concern is growing over the company’s uncertain future. (Image: Kobiz Media)
SEOUL, Jan. 10 (Korea Bizwire) – Although growing semiconductor sales are powering record profits, the future of South Korea’s most famous conglomerate remains murky at best.
In the face of the absence of the imprisoned Lee Jae-yong, who is seen as the de facto head of the Samsung group, and growing competition in the semiconductor industry from other countries, concern is growing over the company’s uncertain future.
Samsung has faced skepticism as it has yet to reach the performance threshold set by its international competitors in the IT industry such as Apple, despite posting massive profits in recent years.
Though Samsung for the first time bested Apple in operating profits during the second quarter of last year, the South Korean conglomerate still lags behind FANG, which refers to the four major IT companies, namely Facebook, Amazon, Netflix, and Google, when net operating income is looked at on an annual basis.
Adding fuel to the fire is the criticism that Samsung’s ‘merger and acquisition clock’ has stopped moving for the past year with vice president Lee Jae-yong jailed on corruption charges.
Over the last year, with both the president and vice president essentially absent, efforts to make strategic decisions involving large-scale investment have effectively come to a halt.
Unlike marketing strategy and new product releases, planning for long-term investment projects for sources of income in the future has not taken place, dealing a serious blow to the company’s future.
“As lifecycles in the IT industry get shorter due to the Fourth Industrial Revolution, and the level of change more intense, the consequences of the lack of leaders in the strategic decision making process could be more significant than widely expected,” an industry source said.
Apart from the 9.2 trillion won deal to take over American car technology company Harman last March, Samsung has not actively pursued any other M&A deals.
Although growing semiconductor sales are powering record profits, the future of South Korea’s most famous conglomerate remains murky at best. (Image: Kobiz Media)
In addition, Samsung faces a number of issues including unfavorable won-dollar exchange rates, growing threats posed by Chinese semiconductor manufacturers which are expected to branch out into the international market later this year, as well as safeguards on South Korean washing machines recommended by the U.S. International Trade Commission.
“It’s true that Samsung Electronics is enjoying its heyday nowadays, but the company is being urged to discover new revenue streams to sustain its success,” an electronics industry official said.
Hyunsu Yim (hyunsu@koreabizwire.com)
