[THE INVESTOR] Samsung Electronics said on March 23 that it expects to maintain its edge over Chinese rivals in the chip segment.
“Technological barriers in chips are relatively higher than in other industries,” Kim Ki-nam, chief of the tech giant’s device solutions division, said at a shareholders meeting this morning.
“It takes more than just large short-term investments to overcome such difficulties.”
Kim’s division raked in 108 trillion won (US$100 billion) in sales last year, accounting for 45 percent of the total revenue. The operating profit stood at 40.3 trillion won, or 75 percent of the annual operating income.
Outgoing Samsung Electronics Chairman Kwon Oh-hyun speaks at a shareholders meeting on March 23.
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Among the items that Samsung shareholders agreed on were the proposed 50:1 stock split and appointment of a new board and outside directors.
Ex-Samsung CFO Lee Sang-hoon was elected chairman of the board, marking the first time that the tech company has separated board chairman and CEO roles. Along with Kim Ki-nam, consumer electronics head Kim Hyun-suk and mobile chief Koh Dong-jin also joined the board, while former CEOs Kwon Oh-hyun, Yoon Boo-keun and Shin Jong-kyun stepped down.
Newly named outside directors include Kiswe Mobile Chairman Kim Jeong-hun and Ewha Womans University professor Kim Sun-uk.
The following are excerpts from the meeting’s Q&A session.
The Investor: Could you explain Samsung’s response to the rise of Chinese firms in the chip segment?
Kim Ki-nam: Chinese firms are heavily investing in almost all types of semiconductors, including memory chips, but technological barriers in the segment is relatively higher than in other industries. It takes more than large, short-term investments to overcome such difficulties. Samsung will give it all its got to continue its lead in the sector.
TI: Has Samsung solved the recent power outage issue at Pyeongtaek complex?
Kim: I want to offer a sincere apology for the matter. The Pyeongtaek complex suffered a power outage two weeks ago, which caused damages of some 50 billion won. Everything has been repaired now, but there is a chance of recurrence despite our best efforts. Nevertheless, we will try to prevent future accidents.
TI: Samsung’s market share in the high-end segment has fallen in the face of competition from LG’s OLED TVs. Can you tell us about your turnaround strategy?
Kim: According to data showing the actual number of products shipped, Samsung tops the high-end segment that includes TVs priced above US$1,500. We will be rolling out other premium products, such as 8K TVs, to continue to lead the top-tier markets and dispel concerns over our market leadership.
TI: Why is there a price gap between TVs sold in the US and Korea for the same products?
Kim: There is difference in the specifications and retail market conditions, while after-sales services also differ slightly. Having said that, the company will work closely with the local sales team to review the situation.
TI: Samsung’s market share in the Chinese smartphone market has declined to single digits. How do you plan to boost the figures?
Koh Dong-jin: I deeply apologize to shareholders for the falling market share in China. When the figure hit single digits, we replaced the local chiefs and streamlined the sales organizations there from three to two to quicken decision-making. We will need some time to see how these measures work out.
Furthermore, China is a much more complicated market than Korea and Samsung is trying different approaches. The latest flagships Galaxy Note 8 and Galaxy S9 have helped us improve our market share in recent months.
By Kim Young-won (firstname.lastname@example.org)