Samsung Electronics Essay

1052 WordsFeb 14, 20125 Pages
Samsung Electronics The case deals with the DRAM market competition, focusing on the strategy that should be undertaken by Samsung Electronics to maintain it’s market supremacy, without sacrificing it’s profit margins in the face of challenges posed by the rising of the Chinese companies in this market. In order to stay ahead of the competition it is important to analyze the competition and take a close measure of not only our own competitive advantages but those of our competitors as well. The immediate competition that was posed to Samsung was by SMIC (Semiconductor Manufacturing International Corp.) a Chinese based industry. SMIC’s apparent strategy was to save on initial investments by not investing directly in design, sacrificing initial profits in order to gain market share. SMIC’s decision to use technology blue prints from established players in the market and setting up a billion dollar production facility to achieve large scales of volume, thereby achieving economies of scale, helped it produce rapidly and exponentially expand it’s market share in a year. The revenues rose from $50.3M to $365M from 2002 to 2003, an approximate 500% increase. The other strategy that SMIC seemed to be working on was to establish its supremacy in the256Mbit DRAM market sector. Backed by already established technologies and by staging an average selling price of $4.43 which was below the industry average of $4.58 and approximately $2 lower than the ASP offered by Samsung. By following this strategy SMIC was incurring a loss of $.41, yet it was successfully carving a niche for itself in the market. Although a relatively new company, SMIC cannot be ignored by Samsung. There are a number of reasons for this. One, SMIC is currently establishing its foothold in the 256Mbit DRAM that forms 77% of Samsung’s DRAM production, by pricing it’s product lower. By establishing it’s

More about Samsung Electronics Essay

Open Document