Wrong Choice?
In an article titled “Samsung's woes: Saved by the chips” posted on its website on Oct. 7, The Economist said that Samsung's decision to select the semiconductor business as an alternative that can address aggravating performance was not the best choice.
The British economic weekly mentioned low-cost companies' offensives, Apple's counterattack with its new iPhones, and market saturation. It pointed out, “But Samsung’s biggest problem is that rival mobile devices are increasingly being sold alongside software and services that it cannot match. As Samsung is structurally a hardware company, it would surprise many if it suddenly came up with great apps or extra services.” The Economist added, "The firm’s best chance may be to stick with gadgets, and to try to create ones that consumers love so much that they fly off the shelves."
The Economist appears to be skeptical about Samsung's decision to increase its investment in its semiconductor business. It said, "Although the decline of its smartphone business will not be an existential threat to Samsung, it remains to be seen whether making chips will replace all the profits it has lost."
On Oct. 7, the Korean tech giant announced that its operating profits for the third quarter plummeted to 4.1 trillion won (US$3.8 billion), which is the lowest in three years. On the previous day, the company also announced that it will invest 15.6 trillion won (around US$15 billion) in the construction of a new semiconductor plant.