Samsung, the beast...their corporate culture...
posted on
May 08, 2008 10:35AM
Samsung seeks TKO in memory market | |||||||
Page 1 of 2 EE Times (05/08/2008 11:58 AM EDT) At Samsung Electronics Co. Ltd., executives speak little about boosting depressed DRAM average selling price.
That goal, which they admit will benefit the entire memory component market and is critical to profitability in the embattled sector, will come later. For now, the Korean semiconductor company is focused on the more easily achievable goal of pounding weary competitors into the ground and eventually driving some of the weaker ones out of the crowded DRAM market. Smelling blood as rivals drown in huge losses and negative margins, Samsung is piling on the pressure in the second quarter with a flood of investments—7.3 trillion Korean Won, or approximately $7 billion—migrating into advanced geometries to further reduce costs and proposing a hefty 100 percent jump in DRAM bit shipment and 130 percent for NAND memory components. "We plan to make massive investments and try to expand our market share through implementation of aggressive investment plans and migration into advanced geometry," said Yeongho Kang, vice president of the semiconductor business at Samsung Electronics in a presentation to the investment community following the release of the company's first quarter results. "We will accelerate our efforts to strengthen our competitive edge and continue to widen the gap with our competitors to achieve further growth and profitability," added Kang. In a recent analysis (see: Commentary: Who'll survive the leap from DRAMs?), EETimes semiconductor editor Mark Lapedus points at defensive actions being taken by leading DRAM vendors to diversify their product lines in a bid to dodge some of the problems in their core memory business. His conclusion was that only one company, Samsung, appears likely to pull off its diversification program. Aside from the normal pricing as well as demand and supply imbalance that the memory market has always had problems dealing with, Samsung is also the main reason its main DRAM rivals appear so disorganized in their response to the industry's most challenging profit problems. That's because the company's margins remain positive while the rest of the field is selling products well below cost. The overall impression is that Samsung has not only managed the crisis better but is also able to benefit from the discomfort of rival memory manufacturers. It's not that Samsung is not hurting. In the first quarter, for instance, Samsung reported operating margin of 4 percent, down sharply from 9 percent in the preceding quarter and 12 percent in the comparable 2007 quarter. Though disappointing, the results were vastly better than figures reported by rivals, including fellow Korean Hynix Semiconductor, which said gross margins slid to minus 11 percent and operating profit margin was negative 30 percent for the quarter.
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