Accused of losing its technological advantage, Samsung will actively improve the competitiveness of the chip business

Samsung has begun to reassure the market about the competitiveness of its chip business after a series of warnings from investors, analysts and employees that it is losing its technological edge.

Samsung is currently the global market leader in memory chips, but is also taking steps to close the gap with its main rival TSMC in the chip foundry sector. In May, the U.S. president visited Samsung's Pyeongtaek chip factory during a visit to South Korea, demonstrating the company's importance to the global economy.

However, analysts pointed out that earlier this year, two of Samsung's biggest customers in the chip foundry business, Qualcomm and Nvidia, were snapped up by TSMC. The two customers were frustrated by Samsung's inability to consistently supply 4nm and 5nm chips. According to market research firm TrendForce, TSMC's share of the global chip foundry market was 54 percent in the first quarter of 2022, more than three times that of Samsung.

Last year, Samsung announced a plan to invest 171 trillion won (about $151 billion) by 2030 to develop its chip foundry business. But according to a report by SK Securities in Seoul, TSMC plans to invest $44 billion this year, while Samsung's investment is only $12 billion.

In Samsung has the advantage of DRAM memory chips, rivals Micron and SK Hynix are faster to launch more advanced chips. Meanwhile, Samsung's flagship smartphone Galaxy S22, released in February, has had problems, indicating that Samsung is lagging behind Apple in terms of hardware competitiveness. The performance and sales of Samsung's "Orion 2200" mobile processor chip released this year have also been disappointing.

Investors, including hedge funds Petra Capital Management and Dalton Investments, have expressed concern about Samsung's rigid corporate culture under Vice Chairman and de facto leader Lee Jae-yong. They argue that Samsung has prioritized rapid growth and cost savings over quality and innovation.

Chan Lee, managing partner at Petra Capital Management, said, "Designing your own chips requires creativity and engineering skills, but under Lee Jae-yong's leadership, Samsung has a stronger risk-averse bias, with engineers avoiding new innovative attempts."