Until 10 years ago, there was no semiconductor company in the world that could rival Samsung Electronics. In 2011, it surpassed Intel to become the global leader in the semiconductor market in terms of capitalization. By 2012, it rose to fifth place among global information technology (IT) companies in terms of market capitalization, standing alongside global giants such as Apple and Microsoft. Semiconductor companies like Nvidia and TSMC didn’t even make it onto the “rival” list.
Since the 2017 political scandal, everything has changed. In 2019, TSMC surpassed Samsung Electronics, followed by Nvidia in 2020. Its global market capitalization ranking fell out of the top 20.
According to the Korea Exchange on Feb. 7, Samsung Electronics’ market capitalization stood at 498.67 trillion won (US$375.65 billion), including preferred shares, at the closing price. This is roughly half the market capitalization of TSMC, which recorded 822 trillion won on the previous day on the New York Stock Exchange. In comparison to Nvidia, which had a market capitalization of 2,238 trillion won, Samsung’s market capitalization is only one-fifth. With a global market capitalization ranking of 22nd, Samsung lags significantly behind Nvidia and TSMC, which are ranked 6th and 10th, respectively. Additionally, it fell to 10th place in terms of IT company market capitalization.
There have been industrial changes, such as a slowdown in the memory semiconductor market and advancements in AI-related stocks. However, experts attribute the decline in Samsung’s competitiveness to fundamental factors. This is because the top executive couldn’t make crucial investment decisions during times of upheaval as he was exposed to legal risks. Meanwhile, rivals such as Apple, Google, and Nvidia made aggressive investments and pursued mergers and acquisitions (M&A). Nevertheless, Samsung Electronics’ M&A team has remained inactive. The economic industry insider stated, “The only person capable of making decisions for the next 10 to 20 years is the top executive.” However, Samsung has faced obstacles in exploring future business opportunities due to the absence of Lee Jae-yong, the chairman of Samsung Electronics.
While the market capitalization of major global companies has surged multiple times over the past years, Samsung Electronics’ market capitalization has remained stagnant. Over the last five years, the market capitalization of Nvidia and TSMC increased by 18 times and 3 times respectively. However, Samsung Electronics only saw a 67 percent increase. This is because companies that prepare for the future are highly valued in times of rapid technological change where emerging technologies such as AI and autonomous driving replace traditional industries.
Experts anticipate that Samsung Electronics will exert full effort in enhancing its corporate value by embarking on large-scale investments and major M&A activities.
An industry insider stated, “Now that Chairman Lee has cleared legal risks, there is a high likelihood that the large-scale projects that were previously only on the ‘review’ list will be pursued one by one. With shareholder return policies and major M&A activities in progress, the stagnant stock prices are expected to gain momentum.”