With Smartphone Business Floundering, Is Samsung Becoming A Semiconductor Company?

September 4th, 2015 by Trefis Team

Samsung Electronics (PINK:SSNLF) is at a crossroads. Its flagship smartphone business has been struggling, with significant market share declines (down to about 22% in Q2’15 from 30%+ in 2013) and thinning margins, amid intense competition from Apple (NASDAQ:AAPL) as well as low-cost Chinese vendors. [1] On the other hand, its semiconductor business – the world’s second largest, behind Intel (NASDAQ:INTC) – has been performing very well, driven by strong demand for memory products and advances in its logic chip manufacturing foundries. Given that its smartphone troubles run fairly deep, some investors and analysts are betting that Samsung will shift its focus primarily to semiconductors, given the thicker margins and the company’s inherent competitive advantages (related: Samsung Q2 Review: The Smartphone Turnaround Isn’t Going As Planned). While the company has certainly strategically emphasized its semiconductor segment of late, the smartphone business remains of vital importance for Samsung. Accordingly, it is unlikely that the company’s focus shifts substantially from the smartphone space in the near term. Below we discuss why.

http://www.trefis.com/stock/ssnlf/articles/309971/samsung-becoming-a-semiconductor-company/2015-09-04