Samsung Electronics

SAMSUNG ELECTRONICS

CASE STUDY

Attention: Chairman Kun Hee Lee

Ariadna Torres Niubo

2016400073

Corporate Strategy

- What recommendation would you make to Chairman Lee regarding

Samsung’s response to the threat of large-scale Chinese entry? Why you

make such recommendation?

Samsung should defend its technological leadership and its benefit advantage,

investing in R&D, strengthening its superior product, design and process efficiency to

fight against the Chinese competitors. The company has to focus more on Flash and

less in DRAM or SRAM, should start winding down PC chips and focus more on mobile

and should defend the older generation of the legacy market for the next decade.

If we talk about DRAM, in terms of frontier products we can see that Samsung has a

core competence in design while China has a lack of technology and will need at least

10 years to catch up them. Due to this, Samsung should continue developing new

frontier products in DRAM. Moreover, in terms of legacy products this are the ones that

will take the biggest hit due to the ability of China to cheaply produce mass older

generation chips. Despite that fact, Samsung can still defend its position near-term.

They should produce for more or less 10 years until China gets good. After this, they

should wind this down and outsource this production to Chinese MFGs by sharing

blueprints. Finally, in terms of specialty products this are the ones that should require

to be produced to the most and to be invested to the most with the highest margins

because they would know that any Chinese firm will be able to do that due to the lack

of technology that they would have. Samsung should put more efforts in producing

more specialty products from old legacy products. At the end of this process they

should invest the earnings from the specialty products for Frontier and Flash R&D and

for that reason specialty products can be viewed as the future “cash cow” of the

company....