Samsung Electronics is increasingly worried about losing its dominance in its core businesses — memory chips, smartphones and even home appliances — as rivals rapidly narrow the technology gap and expand market share, according to industry officials.

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Samsung Electronics chip factory in Gyeonggi Province, South Korea. (Photo: Samsung)

Samsung employees' worries deepened after the company reported a sharp 84.86% drop in operating profit last year. This marked the first time since 2008 that Samsung generated less than 7 trillion won ($5.25 billion) in annual operating profit. South Korea's largest conglomerate was hit hard by the shock as its semiconductor business reported a loss of about 15 trillion won by 2023.

However, the main concern now is that Samsung is losing its reputation as a leading brand in technological prowess. SK Hynix, once considered the runner-up in the memory chip business, is on the verge of threatening Samsung's stronghold of high-bandwidth memory (HBM). SK Hynix is rapidly expanding its DRAM market share through an exclusive HBM supply agreement with chip maker Nvidia.

Nvidia is the de facto leader in the artificial intelligence (AI) chip market. The surge in demand for chips for AI servers has allowed SK Hynix to close in on Samsung Electronics’ DRAM market share. Samsung Electronics’ DRAM market share was 39.4% in the third quarter of 2023, with SK Hynix trailing closely behind at 35%, according to data from market tracker Omdia. This is the first time the gap between the two rivals has fallen below 5%.

The Korea Times quoted an unnamed Samsung official as saying that the company was internally concerned about its declining reputation in the chip business. "Samsung Electronics was an unprecedented leader in the memory chip business about a decade ago, but that seems to be gone," the person said.

“Samsung Electronics used to lead the market with technological excellence and other players – like SK Hynix and Micron – ran behind Samsung,” he continued. “But the trend has changed now. It is clear that Samsung Electronics is no longer the dominant player in the technology market, even though its influence is still huge in the global chip industry.”

Samsung also faces a crisis in its other businesses as arch-rivals pose growing threats. The imaging and home appliance division is expected to generate 1.25 trillion won in operating profit in 2023, down 7.4 percent from a year earlier. LG Electronics' home appliance business posted 2 trillion won in operating profit over the same period, up 76 percent.

Samsung also lost its top spot in the smartphone market last year to Apple for the first time since 2010, according to data from market research firm IDC. Apple's smartphone shipments in 2023 reached 234.6 million units, while Samsung's were 226.6 million.

(According to Korea Times)