Samsung Electronics admits underperformance in AI chip race, vows comeback amid shareholder revolt

Samsung Electronics Ltd. (SEL) announced on Wednesday that the South Korean tech giant is exploring significant deals to drive growth, following shareholder scrutiny over its underperformance in the AI boom, according to Reuters.

SEL’s co-CEO Han Jong-hee warned investors that 2025 would be challenging due to economic policy uncertainties in major economies, while emphasising that Samsung would pursue meaningful mergers and acquisitions to address growth concerns.

At the shareholder meeting, management faced criticism for weak earnings in consecutive quarters and declining stock prices, as the company has lagged behind rivals in advanced memory chips and contract chip manufacturing, sectors driven by strong AI demand. Samsung’s co-CEO and head of its semiconductor business, Jun Young-hyun, apologised for the company’s poor stock performance, acknowledging that it had fallen behind in the high-bandwidth memory (HBM) chip race. Yet, Jun assured shareholders that 2025 would be the year Samsung restores its fundamental competitiveness.

At the meeting, Jun acknowledged challenges in semiconductor M&As due to regulatory and national interests. Internally, the company has admitted to losing ground, particularly in semiconductors, where it trails SK Hynix in HBM chips crucial for AI GPUs.

In recent years, Samsung has also lost market share to TSMC in contract chip manufacturing and to Apple and Chinese competitors in smartphones.

Samsung’s shares plummeted nearly a third last year, hitting a four-year low in November, while rival SK Hynix saw a 26% rise. In response, Samsung launched a 10 trillion won ($7.2 billion) share buyback plan in November.

Yet, Samsung faces greater challenges due to further U.S. restrictions on high-end chip exports to China, its most important market due to stockpiling by Chinese firms. Han stated that Samsung will adapt its global supply chain and manufacturing footprint to respond to U.S. President Trump's tariffs, while also exploring U.S. investment options. The Trump administration is reviewing chip projects that received billions in subsidies under a 2022 law aimed at boosting domestic semiconductor production, with major recipients including Samsung, Intel, TSMC, Micron, and SK Hynix.

Samsung is South Korea's most valuable company, with a market capitalisation of $235 billion, representing 16% of the total value of the country's main stock exchange.