After Samsung Electronics’ stock price fell by almost 30% last year and hit a four-year low in November, the company is attempting to win back investor trust.
Executives acknowledged their mistakes at Wednesday’s shareholder meeting accessed by BrandSpur digital news platform and presented a bold strategy to make up lost ground in the battle for AI-driven semiconductors, which included a $7.2 billion share repurchase and possible mergers and acquisitions.
Samsung has lagged behind rivals such as SK Hynix in the chip industry when it comes to high-bandwidth memory (HBM) chips, which are crucial for AI-driven data centres. As other companies profited from the strong demand, Samsung’s stock fell, wiping out billions of dollars in market value.
A 65-year-old shareholder named Lee summed up the dissatisfaction of long-time investors with the current state of affairs: “Last year, the stock price was so bad that I even considered investing in U.S. stocks instead.”
The leader of Samsung’s semiconductor division and co-CEO, Jun Young-hyun, said that the company had not moved quickly enough. He revealed: “We were late in reading the market trends and we missed out on the early market as a result.”
Samsung’s response has now been planned by the company’s leadership. The corporation started a $7.2 billion share buyback in November to stabilise stock performance. Executives are aware that financial tricks won’t be enough to revive long-term development, though.
Han Jong-hee, co-CEO, cautioned that there will be many global economic concerns in 2025. Samsung is looking to make “meaningful” mergers and acquisitions to combat this.
According to him: “There are some difficulties in doing semiconductor M&As due to regulatory issues and various national interests, but we’re determined to produce some tangible results this year.”
Continuing, to boost internal motivation and bring employees on board with the company’s turnaround initiatives, Samsung is once more thinking about extending its stock-based performance incentive program to staff members. In addition to pressure from shareholders, internal discontent is increasing.
Chairman Jay Y. Lee’s remarks at an executive conference that were leaked showed worries about stagnation.
He had this to say: “Our technological edge has been compromised across all our businesses. It’s hard to see that efforts are being made to drive big innovation or tackle new challenges. There are only efforts to maintain a status quo rather than shaking things up.”
There are several sectors where the company’s deterioration is evident:
Memory Chips: Leading the way in HBM technology is SK Hynix.
Contract Chip Manufacturing: The market is still dominated by TSMC.
Smartphones: Samsung’s market dominance is being eroded by Chinese competitors and Apple.
Jun promised investors that a strong rebound would occur in 2025. He said: “It will be the year when we recover our fundamental competitiveness.”
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Samsung is managing geopolitical concerns as well. Due to local companies’ hoarding, China has grown to be Samsung’s largest market, making the U.S. government’s limitations on exporting high-end chips to China a significant obstacle. In addition, Washington is examining subsidies provided under the CHIPS Act of 2022.
Although SK Hynix, Samsung, Intel, and TSMC have all benefited greatly from funding, future semiconductor investments may be impacted by changing U.S. regulations. Samsung would adjust if necessary, Jong-hee said.
He went on to say: “We will flexibly respond to U.S. tariffs with our global supply chain and manufacturing footprints while looking at options for U.S. investments.”
However, with 16% of the South Korean stock market capitalisation, Samsung remains the most valuable corporation in the country despite these problems. Samsung’s significance in the economy is highlighted by the fact that about 40% of domestic investors own shares in the company. However, with competitors gaining ground and investor patience ebbing, 2025 will be a pivotal year for Samsung.
Samsung runs the risk of slipping even more in the cutthroat IT sector if its recovery plan doesn’t work.
