Deterioration of Samsung: Unraveling the Mystery Behind a Fallen Technology Empire
Samsung, the South Korean tech giant, is facing challenges in the global electronics market. The company's decline can be attributed to several factors, both internal and external.
External Factors
Samsung's semiconductor business has been severely affected by US export restrictions, causing a 94% year-over-year operating profit decline in Q2 2025. These restrictions have limited sales of advanced AI and semiconductor chips to China, leading to shipment delays, inventory adjustments, and one-off costs that have hurt profitability.
The AI chip market, dominated by rivals like SK Hynix and TSMC, has also proven challenging for Samsung. Weak demand for AI chips and foundry services, especially in China, has dampened Samsung’s semiconductor sales and competitive positioning.
Samsung's market share in China's consumer electronics market has plummeted from about 20% in the early 2010s to less than 1% by 2019. This decline is primarily due to aggressive competition from local brands like Huawei, Xiaomi, and Oppo, regulatory and geopolitical challenges, and strategic missteps including production facility closures in China.
Internal Factors
Samsung's challenges in foundry business operations and technology maturity persist, with persistently low utilization rates at mature semiconductor nodes leading to weak performance. Uncertainties remain about the company’s newest 2nm process technology and its commercial viability.
The global semiconductor market's ongoing volatility has also impacted Samsung's overall earnings. Despite some growth in memory chip revenue driven by AI server demand, Samsung's device solutions division (semiconductors and chips) has dragged down overall company profits.
Rebuilding and Adapting
In response to these challenges, Samsung is taking proactive steps to regain market share. The company is investing in emerging technologies such as AI, IoT, and 5G, and is modernizing its management structure to empower teams to innovate swiftly and effectively.
Samsung is also forming strategic partnerships and collaborations to improve its offerings, such as working with software developers for a more integrated user experience. The company is beginning to explore opportunities in sectors like wearables, smart home technology, and electric vehicles to open new revenue streams.
Samsung's efforts toward new technologies, such as AI and augmented reality, could provide new avenues for growth and differentiation in the ever-evolving tech industry. The company is also increasing its focus on consumer engagement and brand storytelling to rebuild trust and loyalty, leveraging social media and digital marketing to connect with younger audiences.
Despite these challenges, Samsung, founded in 1938, has evolved into a leading electronics manufacturer, diversifying into sectors such as semiconductors, consumer electronics, telecommunications, and more. The company's commitment to sustainability and social responsibility may become critical factors influencing its brand perception and market performance in the future.
[1] The Information
[2] Bloomberg
[3] Reuters
[4] The Korea Herald
[5] CNBC
Samsung's decline in the global electronics market is not only due to external challenges like US export restrictions impacting its semiconductor business and weak demand for AI chips, but also internal factors such as persistently low utilization rates at mature semiconductor nodes and uncertainties about the commercial viability of its newest 2nm process technology.
Samsung is reacting to these challenges by investing in emerging technologies like AI, IoT, and 5G, modernizing its management structure, forming strategic partnerships, and exploring new revenue streams in sectors like wearables, smart home technology, and electric vehicles.
