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as the world's leading semiconductor manufacturer, samsung electronics has long occupied a position that cannot be ignored in the global technology industry. however, a series of negative events in recent times, such as layoffs, factory construction delays and poor market performance, even though this the giants also encountered substantial problems.

samsung's own operating difficulties are also a sign that the entire global semiconductor industry is facing profound changes.

Part 1

challenges and dilemmas of samsung electronics

in september 2024, samsung announced the implementation of large-scale manpower structure adjustments. the proportion of layoffs in some areas was as high as 30%, mainly concentrated in the chip business department.

this move is a direct response to the impact of the decline in demand in the global chip market on the company. the planned start-up of a new factory in tyler, texas, usa, has been delayed, and it has encountered obstacles in building and expanding production capacity.

samsung's immediate response to market fluctuations has also been conservative in its future development prospects. the delay of the taylor factory project may affect the acquisition of funds under the us chips act, which in turn affects the company's long-term planning.

● samsung's dominance in the memory market is being tested like never before.due to the sharp decline in global dram and nand flash memory prices, a fierce price war has broken out among major players. samsung was able to use its cost advantage to win the market through price reduction strategies, but in the current environment, the effectiveness of this strategy has been greatly reduced, and it has even intensified disorderly competition in the market.

in the field of high-bandwidth memory (hbm), although the growth in ai and high-performance computing demand has brought new opportunities to this segment, its scale is relatively small and not enough to reverse the downward trend of the overall memory market. as more manufacturers join the competition, profit margins in the hbm market are gradually declining.

● another major challenge for the semiconductor industry is high capital expenditures.although the chips act promises to provide financial assistance to domestic chip manufacturing in the united states, the conditions for disbursing funds are strict and require companies to achieve specific development goals.

◎ samsung's delayed construction of its new factory in the united states may cause it to lose important financial support, thereby increasing financial risks.

◎ intel also faces similar challenges. for these companies that are highly dependent on capital-intensive projects, any uncertainty in the capital chain will pose a serious threat to their operations.

in addition, the continued downturn in the memory market may also lead to over-investment and further worsen the supply-demand relationship.

changes in the external environment have also brought new challenges to samsung, especially the rapid development of china's semiconductor industry.china's local chip manufacturing industry has reduced its reliance on imported technology, compressed samsung's share of the global market, and also posed an existential threat to small and medium-sized wafer foundries.

technology export restrictions between china and the united states have exacerbated the situation, with china's local equipment procurement slowing down and impacting the global semiconductor supply chain.

Part 2

outlook: samsung’s response strategy

how does samsung break the situation? a practical thing that can be done is to focus on developing high-end storage products for ai and high-performance computing.such as hbm and ai special chips to meet the rapidly growing market demand.

due to continued investment in ai, demand for server ai will remain strong in server products such as hbm, ddr5 and ssd.

increased production and sales of hbm and server dram are likely,samsung will expand sales of high-value-added products for artificial intelligence, including hbm3e and high-density server modules based on 1b nanometer 32gb ddr5 technology, and by optimizing its qlc product line suitable for all applications such as servers, pcs and mobile, and expanding its products for artificial intelligence ssd sales for smart servers.

samsung should increase investment in wafer foundry field,in particular, improving production capacity and yield rate on 3-nanometer and more advanced processes and enhancing its competitiveness in the global high-end market are things that were not done well before but must be done well now.

with the development and distribution of the 2nm gaa process development kit (pdk), samsung electronics is preparing for mass production of 2nm technology in 2025, supporting customers to advance product design, focusing on stable supply of exynos 2500, and integrating 20-megapixel images the use of sensors in smartphone cameras extends from wide angle to telephoto.

the overall foundry market is expected to grow, especially in the advanced technology segment, due to rebounding mobile demand and surging demand for artificial intelligence/high-performance computing.

benefiting from full mass production of second-generation 3nm gaa technology in sub-5nm advanced technologies and expanding orders for artificial intelligence and high-performance computing applications, the target is to quadruple the customer base by 2028 compared to 2023, sales the amount increased ninefold.

summary

samsung electronics' problems actually reflect that the semiconductor industry seems to be prosperous, but every player is facing great pressure.