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Samsung Electronics reported a sharp drop in quarterly earnings, citing fierce competition from Chinese chipmakers and technology leaks as crucial factors behind the downturn.
Although it didn’t disclose specific division details, such as semiconductors, the company issued a separate statement explaining that its chip business was dragging down overall performance due to increased supply from Chinese memory chip companies.
Moreover, Lee Chan-hee, chairman of Samsung’s Compliance Oversight Committee, highlighted technology leaks as a significant concern in the committee’s recently released 2023 annual report.
Officials are taking notice. On Oct. 20, Park Sang-ook, chief secretary of Science and Technology, said Samsung’s “crisis” reflects a broader need for the country to find new growth drivers beyond semiconductors.
At a think tank forum on Oct. 14, former officials and industry experts agreed that the semiconductor industry is at a crossroads, with China posing the most significant threat. Attendees stressed that “full government backing” is crucial for the country to maintain its leadership in the intensifying “nation-versus-nation” semiconductor competition.
Nomura Securities estimates that CXMT’s monthly dynamic random access memory (DRAM) chip production could reach 200,000 units by the end of 2024, which is about 11 percent of global output, and projects the company could become the world’s fourth-largest DRAM maker after U.S. chipmaker Micron. DRAM chips are essential for temporary data storage in digital processing.
In addition, the Chinese company may have benefited from intellectual property theft. Earlier this year, South Korean prosecutors indicted a former Samsung department head for allegedly leaking 18-nanometer DRAM chip process information to CXMT in 2016 and recruiting around 20 technicians from Samsung and other companies to work for Chinese companies.
The Epoch Times reached out to CXMT for comment but did not receive a response by publication time.
This poses a threat to Samsung, which heavily relies on chip exports to China. In the first half of 2024, China accounted for more than 35 percent of South Korea’s chip exports, and more than 90 percent of Samsung’s sales in China during this period were semiconductors, according to official data.
In September, former Samsung and SK Hynix executive Choi Jin-seog was re-arrested on fresh allegations of leaking Samsung’s 20-nanometer DRAM process technology to Chinese companies. Already on trial for industrial espionage since July 2023, Choi was first arrested in July 2023 and released on bail in November 2023.
Lee, the chairman of Samsung’s Compliance Oversight Committee, said technology leaks are a major concern in the committee’s 2023 annual report and called for “innovative improvement in [the company’s] governance structure.”
To cope with these challenges, Samsung plans to cut up to 30 percent of its overseas workforce in some units by the end of the year, insider sources told Reuters. This move could affect jobs worldwide, with India alone potentially losing more than 1,000 positions.
The Epoch Times could not independently verify this claim.