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Bloomberg Reports Samsung May be "Uncatchable"... Is the Newly Crowned World's Largest Tech Company Reaching Too Far?
The following is the beginning excerpt from a Bloomberg article which hit the front page this morning, Tuesday May 18, 2010.
As many of you know Samsung is now the world's largest tech company, and has continued to record blowout earnings amidst a sea of failing competitors.May 18 (Bloomberg) -- Samsung Electronics Co.’s record 18 trillion won ($15.6 billion) capital spending plan may widen its lead in the memory-chip and flat-screen industries to the extent rivals can’t catch up, investors and analysts said.
Samsung, which posted record profit last quarter, may avoid accelerating the typical shortage-to-glut cycles in the chip and LCD industries as competitors can’t afford boosting outlays, analysts at Meritz Securities Co. and NH Investment & Securities Co. said. The investments may push spending in the memory-chip industry to the highest since 2007, a boon for equipment manufacturers such as Applied Materials Inc.
“Who can catch up to Samsung? No one,” said Choi Min Jai, a fund manager at Seoul-based KTB Asset Management Co., which manages about $9.3 billion in assets, including Samsung shares. “If others invest together, then the industry may fall apart but there’s no one able to race with Samsung right now.”
Click here for the full Bloomberg article...
I'm interested to get some feedback from KBC members on the issue...
Is 18 Trillion Won too much too fast for the firm, as many governments and industries still face financing roadblocks moving forward in 2010?
Is it feasible for Korea to maintain competitiveness over time, as the won appreciates relative to the dollar and prices for Korean goods rise in foreign markets?
How will Samsung avoid the infamous yet beleaguered fate of Sony in Japan, where the "best of breed" technology giant outgrew it's competitiveness as emerging players developed head to head technology at a fraction of the price?
Will China do to Samsung what Samsung did to Sony?
Tags: Competitiveness, Displays, Economic, Economy, Electronic, Korean, Samsung, Semiconductors, Sony, Technology, More…
Replies to This Discussion | 이 토론에 대한 답글들
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Permalink Reply by Steven S. Bammel on -
Is any company too great to catch? I don't know about the short-term, but in the long-term, Samsung is surely as vulnerable as ever. It's great to see the Samsung is working hard to avoid complacency, but even that's probably got its limits.
Good luck to them though!
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Permalink Reply by Blair A on -
Remember Sony?
I agree with Steven. And even though the LT looks good, All companies have their limits. Esp tech firms. Except Apple, where I'm sure Jobs has made a deal with the devil.
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Permalink Reply by Robert Eberenz on -
I also hope Samsung can keep the ball rolling for years to come, and personally enjoy the competitively priced high performance products available in the U.S.!
The issue moving forward may be for the company to realize that 2009 returns aren't necessarily sustainable growth levels, and that increasing capex by +60% in one year will have it's costs if global access to money continues the recent trend towards higher yields and tighter financing.
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Permalink Reply by Mark B on -
Both the existence and content of that article are equally ridiculous.
Is it seriously newsworthy when a fund manager speaks glowingly of a company he's long and strong in? Remind me to ring up the local Bloomberg desk next time I fire up etrade.
Had the person quoted in the article said anything neutral to negative about the company in question, now THAT would be big news. If by big news you mean lawsuit.
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Permalink Reply by Simon Hoggett on -
I was thinking the same thing. As I read the line "Who can catch up to Samsung? No one,” said Choi Min Jai, a fund manager at Seoul-based KTB Asset Management Co., which manages about $9.3 billion in assets, including Samsung shares.
I really couldn't help but laugh... It's as if they asked a basketball fan wearing a Lakers jersey... "Who will win the NBA championship this year" Of course the guy is going to respond the Lakers. Imagine the backlash if the a local fund manager talked negatively about Samsung and to Bloomberg of all people... Me thinkgs that guy would not have a job by days end.
That report was incredibly self-serving that I wonder how much advertising Samsung will be putting into Bloomberg in the near future.
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Permalink Reply by Joon Kang on -
Guess you can say Samsung learned from Microsoft (Windows 3.11 aka Apple 89).
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Permalink Reply by Joon Kang on
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#1. I'm glad I bought stock in Samsung electronics 6 months ago. I think the genius of Samsung Electronics is that they're both a competitor and supplier to the competitor whereas Sony only created products Samsung creates the internal parts and supplies them to other manufacturers.
#2. Samsung can make chips faster, cheaper and better than the competitor.
#3. My worry about Samsung is that they're not really innovating anything, they don't have a product that shifts the paradigm like the Sony Walkman or Playstation. I hope they create a chipset or battery or something that will change the paradigm which will keep them ahead of the game for a longer time to come. As they are taking existing technologies and making it better (the old Japanese model???).
#4. I do have confidence in Samsung in the long term, I will use the following analogies; if James Cameron produces a movie we know it will be good, if Apple comes out with a new product, we know it will be good, along that logic, if Samsung does it, it may be good, it still remains to be seen.
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Permalink Reply by Steven S. Bammel on
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BTW, the related KBC 9.9 with Daniel discussion can be found here: http://www.koreabusinesscentral.com/forum/topics/weekly-podcast-the...
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Permalink Reply by stephanemot on -
China remains the main threat, along with Samsung itself (anyone can misstep, look at what was said of Toyota only two years ago).
Accelerating R&D is the right thing to do, but Samsung Electronics (the mother company being already everywhere) should also consider a shift in business models, beyond hardware. I'm surprised that Lee Gun-hee has not pushed it yet.
Apple has done it since iTunes, and even ventured into edition via its app store. It overtook Microsoft in value, and yet its 'leadership' if not an illusion, at least not sustainable because they've never been great at coping with an open ecosystem.
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Permalink Reply by Steven S. Bammel on
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Your Apple comparison brings up two thoughts:
1. Samsung may be the "biggest" IT company, but they are far from the most valuable. I think I'd rather be valuable, than big.
2. I agree that Apple's leadership is unsustainable. They've got products that are six-months ahead in terms of technology, and they've got great marketing. Those two have fed into a virtuous cycle. But other, more open, approaches are going to hit them hard eventually and they won't be able to recover from that. Losing Steve Jobs would also be a grave threat to the company.
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Permalink Reply by stephanemot on
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Samsung's market shares are impressive, and the brand has gained considerable momentum, but it takes more to remain at the top. Samsung's OS Bada is a me-too initiative without much conviction.
Note that as it peaked, Sony invested massively in trade diversification. Columbia Pictures was a spectacular move, Sony Networks a less glamour one, but neither actually changed the paradygm. The company managed to recover in more traditional fields : PlayStation was an interesting ecosystem, but based on hardware.
I expect more from this great company, but this will mean allowing disruption in their own DNA. Samsung's tradition of innovation is based on scale and speed, which are bound to be eventually matched by rivals. I'm sure they are very much aware of the need to evolve : their strategy teams know exactly what happened to Sony or what's happening to Nokia.
PS: Apple simply cannot remain ahead in terms of technology without embracing a more open model. Furthermore, commoditization is ahead.
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Permalink Reply by Joon Kang on
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What do your comments sound so sour grape and what everybody does wrong. Nintendo is a great example of a company that doesn't have any innovative products, but the DS is the #1 selling handheld game console, the Nintendo Wii still sells a lot of units, they're still in the game. Johnson & Johnson doesn't necessarily have many innovative products, they're still in the game, and if there are innovative products, they buy the company and leave them alone.
All this "innovation" or "disruptive technology" is the buzzword of the 2000's, just as there were buzzwords in the 80's such as LPF, competitive balance, etc.
The fundamentals always work, have a cash reserve, earmark budget for R&D, hire the best people, have a good management team.
Sony despite their troubles, are still in the game.
Apple is always ahead in technology, Windows 7 is a wannabe OS X, the Android although they closed the gap on the iPhone OS, the iPhone OS is still the benchmark
You must have a Chinese bias, as I stated in the podcast, Indians historically are more innovative than their NE Asian counterparts. Just look at the CEO of Adobe and other IT companies and look at who the innovators of Silicon Valley are.
As for Nokia, it either shows me you're ignorant or you're US-centric in your bias of your opinions. Nokia still is the #1 seller of handsets in the WORLD, where #2 is a very distant second.
Samsung's top management is smart enough to know when it has to change, it will change. That's the most important skill that any senior managers need, not GPA, but the SENSE to know when a change has to occur.
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