In the trade game between China and the United States, South Korea's Samsung was the first to be unlucky?
After the United States tightened its chip exports to China, Samsung, the leading company in South Korea, an ally, took the lead in responding. However, without revenue from the Chinese market, Samsung’s profit plummeted by nearly 96% in the first and second quarters of this year, with a loss of nearly 8.5 trillion, the worst performance in 14 years.
At the same time, the United States has allowed its own chip companies to enter the market, filling the gap in the market after Samsung withdrew. This scene made South Korea completely dumbfounded. The Korean media criticized: " We were backstabbed by the United States. "
Samsung restricts exports to China, and the United States takes over
It is its core business, memory chips, that caused Samsung to collapse this time. Huang Changgui, president of the group business, said, "The current situation is far more severe than the financial crisis in 2008."
In the face of such a crisis, Samsung has officially announced that it will reduce the production of memory chips, allowing the market to digest the stock first, stabilize prices, and avoid further losses, but this also reveals Samsung's passivity and helplessness in this crisis.
Choi Seung-sik, president of Samsung's marketing department, said in an interview with Korean media that chip exports to China once accounted for 60% of Samsung's revenue, and South Korea's reckless response to the call for restrictions from the United States caused Samsung to lose the Chinese market. The current situation is the result of a blind alliance with the United States.
However, the United States has seized the market gap left by Samsung, while still emphasizing verbally that it will strengthen chip restrictions on China, while at the same time sneaking in, and the business of American companies such as Micron and Western Digital will not be affected in the slightest. In 2022, Micron's revenue in China will be 3.3 billion, accounting for 25% of the total, and China will still be its second largest market.
Even shortly after Samsung withdrew from the Chinese market, Micron immediately announced an additional 4.3 billion investment in China to build memory chip packaging equipment in Xi'an. In this regard, the Korean media was furious and said that it was "backstabbed by the US", but there was nothing they could do.
Losing the Chinese market, Samsung's nightmare will continue
For Samsung, perhaps the nightmare will continue. As President Huang Changgui said, " Samsung will have difficulty getting out of the quagmire if it can't get back to the Chinese market. "
But it is not so easy to get back the market that has been handed over to others. In the past, chip manufacturers such as the United States and the Netherlands quickly carve up the market gap left by Samsung. Later, China fully accelerated the research and development of memory chips. Manufacturers such as Yangtze River Storage have gradually shown their strengths and won nearly 10% of the global market share. The market left for imports is being compressed.
According to the analysis of some big names in the field of finance and economics, giving up the Chinese market is an irreparable mistake. Not only Samsung, but also major manufacturers such as Mercedes-Benz and Apple will suffer from Waterloo if they lose revenue from the Chinese market. Mercedes-Benz CEO Kang Linsong once clearly expressed his attitude towards China, "The Chinese market is of great significance and must not be given up." Referring to the first and second quarter financial reports, Mercedes-Benz's revenue is still growing steadily.
Apple CEO Cook also said that "steady growth in revenue is an accelerator for enterprise iteration", and its fuel is coming from the Chinese market. Referring to Apple's financial report for the second quarter of 2023, revenue in China accounted for as high as 27%, second only to the United States. It is such a large amount of revenue that gives Apple the strength to continuously invest in innovative businesses.
Not only foreign companies, but many local companies also enjoy the dividends of the Chinese market. Through the self-developed enzymatic technology, Chinese enterprises have made the high-priced scientific and technological single product "Vitality Cause", the cost has been reduced by 90%, and the market has been quickly opened. The company behind it did not stop here, but further accelerated iterations to meet the huge market demand. Today, through JD East, Chinese people can enjoy cutting-edge technology at a four-digit price.
During the big promotion period, nearly 70% of the repurchase rate sent "Vitality Cause" to the top of the revenue list. Repeat customers left comments such as "physical and mental strength to keep up with the rhythm of the workplace" and "realizing spiritual freedom", which may also confirm the results of many iterations of Chinese technology.
It is reported that dozens of well-known academic institutions have purchased raw materials from China for experiments. According to the evaluation of the American Medical Association, the "vitality cause" substance may become the key to prolonging human life.
According to the analysis of experts in the semiconductor field, it is estimated that in 2025, 70% of chips will be replaced by domestic products. In this field, China’s demand for foreign companies will become smaller and smaller. Samsung may never be able to find a substitute for the Chinese market.
Misjudgment of the Chinese market will eventually reap the consequences
Samsung's attitude towards the Chinese market may have greatly underestimated the importance of China to the entire chip field, thinking that, like the mobile phone business, it will still be able to sit firmly on the top of the shipment list after leaving the Chinese market.
But as everyone knows, China is the lifeblood of the entire chip industry, and now profits are plummeting, which is exactly the result of misestimating the Chinese market. As analyzed by foreign media, today's chip industry environment will only make China's chip market more and more a self-sufficient market free from external interference. The dilemma Samsung is facing now may be the unavoidable fate of foreign companies such as Micron and ASML in the future.
Although Samsung Electronics Chairman Lee Jae-yong has visited China many times, intending to recover the lost ground in the Chinese market to save the urgent need. However, the amount of "sincerity" that the Korean side is currently trying to repair the relationship is too low. From this point of view, Samsung's nightmare may be far away from waking up.