A Look into Samsung Electronics
The memory chip market has been a lucrative industry to be in and get into for many years. Companies like Samsung have been at the forefront of engineering new and advanced memory and flash chips since the early 1980's. Average growth in the industry has averaged about 16% per year and is expected to continue. With the potential for large profits, many companies, including Chinese corporations with large amounts of funds available, are beginning to enter the industry; firms such as ASMC, NEC Electronics Co., and Grace Semiconductors among many others. This threat of competition by the start-up Chinese logic chip producing companies is the primary issue facing Samsung in 2005. These competitors have access to cheap land, credit, utilities, taxes and a large pool of talent meaning the Chinese are able to sell their products for less and still attract a large amount of customers for the sake of gaining market share.
Estimates predict that China's semiconductor output will reach 9% of the world's total production of chips by 2007.
Memory chips have been seen as commodities for many years and the only way to compete in commodities is by price. However, Samsung views its products as high quality and refused to lower prices despite already having the highest prices among the main competitors. With this focus on memory chips as a commodity, prices will continue to plummet in the industry as new manufacturing techniques become available to all. This secondary threat of decreased profit margin on memory chips for the industry will be a challenge Samsung will have to overcome. Samsung does maintain an edge among its buyers and in fact many companies attest to the quality of the Samsung semiconductors by choosing them as their top...