Samsung Electronics Case Summary

Topics: Flash memory, Samsung Electronics, South Korea Pages: 5 (1832 words) Published: November 21, 2012
Under Kun Hee Lee’s leadership Samsung has risen to become the world’s leading memory producer for all types of PCs, game players, digital cameras and other electronic equipments. In 1987, Samsung was a “bit player”, years behind its key Japanese rivals. In 2003 Samsung’s memory division is bigger than that of Japanese rivals in both size & profits. The memory chip industry was expected to face cyclical downturn in 2005 and Samsung survived two previous downturns still some outside believers believed that the Chinese entry would fundamentally change industry conditions in the years ahead. There has been a strong growth in economic importance of Semiconductor industry over the previous five decades. Semiconductor products were classified into two categories; Logic chips and memory chips. Logic chips were used for processing information/ control processes whereas Memory chips were further classified into DRAM (Dynamic Random Access Memory), SRAM (Static RAM), & Flash to store information. The case is focused on Global memory chip industry. DRAMs captured over half of the memory chip market in 2003. DRAMs were previously used in PCs, but their share declined from 80% to 67% between 1990 and 2003. Telecom & consumer electronics were growing consumers of DRAMs in 2003. Communications products were expected to grow from 3.5% to 7.9% in 2008 while TVs, set-top boxes, game devices such as Play station represented 7% of global market in 2003. In 2003, SRAM, a type of buffer memory which facilitated computer processing & mobile phone functionality, accounted for 10% of the industry sales and Flash memory, used in heavy digital cameras & mobile phones, is a hot growth area and account for 32% of the industry sales. The memory industry contained powerful suppliers and price conscious customers. Over time technology grew more complex and suppliers became more concentrated. Only 2-3 main players dominated the key segments of equipment market. Suppliers of memory raw materials provided discounts of up to 5% for high-volume buyers. Customers were more fragmented with no single OEM controlling more than 20% of global PC market. Memory represented 4-12% of total PC material cost and 4-7% of mobile phone material cost. There was an intense competition in market but OEM would pay upwards of 1% average premium for a reliable supplier. In 2005 industry faced fierce rivalry and large-scale entry by Chinese firms. Samsung announced a decline in market prices of its cutting edge technological products in late 2004 but Chinese firms competing in older product lines traded off profit margins for market share. Chinese competitors had an easy access to local finance and talented local engineers but it lacked Organizational skills & used older technology. MAJOR COMPETITORS:

The major competitors of Samsung in 2005 were:
Elpida Memory Inc (Japan): Established as a joint venture between NEC and Hitachi. It produced memory products for mobile devices & consumer electronics goods. In 2004, it announced that it would start the construction on its 12 inch water fab production. Hynix Semiconductor, Inc. (S. Korea): founded in 1983 as Hyundai Electronics. It changed is name to separate itself from financially troubled Hyundai Group. During 1996 cyclical downturn the company dramatically increased its capital expenditure but in 1999 when market began to expand Hyundai had no resource to increase its capital expenditure and it ended up in decreasing its capital expenditure. In 1999 Hyundai acquired LG Semiconductor which resulted in more debt burden which together with the next cyclical doenturn brought the company at the verge of collapse in 2001-02. A multibillion-dollar bailout allowed the company to survive. It then entered into a joint venture with ST Electronics. Infineon Technologies AG: Germany-based company which spun off from Siemens. In recent years, it entered into the product purchase &...
Continue Reading

Please join StudyMode to read the full document

You May Also Find These Documents Helpful

  • Samsung Electronics Research Paper
  • Samsung Electronics Essay
  • Samsung Electronics case solution Essay
  • Case Study of Samsung Electronics Essay
  • Samsung Electronics Case Essay
  • Essay about Case Study for Samsung Electronics
  • Samsung Electronics Case Analysis Essay

Become a StudyMode Member

Sign Up - It's Free