Samsung Electronics

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Samsung Case
After reviewing Samsung’s current position in the semiconductor and memory chip industry, Swift Consulting has come up with a full analysis on the threats and opportunities facing the company. The primary threat facing the firm is the entry and growth of Chinese semiconductor companies. To respond to this threat, it is our assessment that Samsung should allocate less production to capacity to Dynamic Random Access Memory, and increase production and research to the more rapidly growing higher end Dynamic Random Access Memory, Static Random Access Memory and Flash memory markets. When Samsung entered the memory chip market, they gained market share by initially taking a loss on DRAM, because the company believed they would see future profit. The Chinese companies are following the same strategy to gain ground in the industry by their ability to produce at a high level, and sustain a loss. Samsung’s biggest threat in the semiconductor industry is the Chinese company Semiconductor Manufacturing International Corporation. By licensing agreements with German based Infineon, Japan based Eplida, subsidies from the Chinese government and private investment; SMIC has had profit increase of over $300 Million from 2002 to 2003. The secondary threat in facing Samsung is that China is expected to become the world’s second largest purchaser of semiconductors, after the United States. SMIC and the Chinese markets are deeply invested in lower end DRAM. By extensive research, development and investment on higher end DRAM and flash, Samsung can take advantage of the projected growth in those markets. Chinese competitors are heavily invested in lower end DRAM products for personal computers. Along with the expected cyclical downturn in the memory market, and especially the personal computer market, it is our opinion that the DRAM market will get flooded with…...

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