The core management of all divisions of Samsung Electronics is entering discussions on strategies for the second half of the year. With the rise of reciprocal tariffs and geopolitical risks in the Middle East, a comprehensive review of pressing issues and medium to long-term challenges in key businesses such as semiconductors, smartphones, and home appliances is planned. In particular, this year, it is known that there will be a focus on the foundry and system LSI divisions, which have continually hindered revenue performance, along with home appliances that have recently seen deteriorating profitability.
According to industry sources on the 17th, Samsung Electronics is holding a global strategy meeting from today until the 19th. The global strategy meeting is held regularly twice a year, in the spring and autumn, to discuss sales targets by business and region, as well as crisis response measures. Executives from affiliated companies and heads of overseas corporations gather to establish pressing issues and medium to long-term strategies for each institutional sector. This meeting is being conducted under the chairmanship of Roh Tae-Moon, the acting head of the Device Experience (DX) division, and Jeon Young-Hyeon, the head of the Device Solutions (DS) division.
The Device Experience (DX) division, responsible for set businesses, will hold meetings in order on the 17th for the Mobile Experience (MX) division, on the 18th for the Video Display (VD) and Home Appliances (DA) divisions, and on the 19th for the entire company. The Device Solutions (DS) division, responsible for semiconductors, is expected to hold a meeting on the 18th. Lee Jae-Yong, the chairman of Samsung Electronics, is not attending the meetings as in previous years and is expected to receive post-meeting reports separately.
This year's strategy meeting is expected to be held under higher tension than in any previous year. With the impending tariff bomb from the Trump administration and the emergence of unexpected risks from the Middle East conflict, a redesign of the supply chain strategy is inevitable.
A source familiar with Samsung Electronics said, "This global strategy meeting will discuss intensive inspections and alternatives for divisions that have gone beyond deteriorating profitability to reach a level of losses," and noted, "There may be a serious approach that requires organizational restructuring and workforce realignment beyond crisis response levels, as well as a comprehensive revision of strategies."
In the case of the memory division, a pillar of Samsung Electronics, the high bandwidth memory (HBM) business, which has struggled for a long time, has recently seen a rebound starting with supply to AMD, but the profitability of general-purpose DRAM and NAND flash is deteriorating. While it is currently defending profitability by lowering production levels, critics say this is merely a temporary measure.
An industry source noted, "Samsung Electronics has historically demonstrated its 'real capabilities' by increasing market share when competitors cut production with overwhelming productivity," but also pointed out, "However, recently, it has lost its standing as the first-place company, falling behind SK hynix and Micron."
In the foundry division, while recent achievements, such as securing orders for system-on-chip (SoC) for the Nintendo Switch 2, have been recorded, it remains difficult to escape from losses. The System LSI division is also continuing to post losses quarterly as it has been unable to supply the Exynos series to flagship smartphone products. For several months, the management diagnostic office under Samsung Global Research has been conducting consulting for these two divisions, and the results may be discussed at this global strategy meeting.
The home appliance business is also in an emergency state. The home appliance sector, which has recorded the lowest operating profit margin among Samsung Electronics' major divisions over the past decade, is expected to turn to losses this year, according to projections from domestic securities firms. In fact, the operating profit of the VD and DA divisions, which handle TVs and home appliances, is expected to be around 300 billion won in the first quarter of this year, nearly half of the 500 billion won recorded in the same period last year.
The industry points out Samsung Electronics' chronic high-cost, low-efficiency business structure. There are criticisms that the company adheres to a business model that invests excessive costs in marketing rather than product competitiveness. An electronics industry source said, "Given that our competitor LG Electronics records an operating profit margin close to 10%, it is clear that there are structural problems with Samsung's home appliances," and added, "Although it has been promoting AI for several years, the fundamental issue is that the competitiveness in research and development of the products has lagged behind."
Adding to this, the U.S. Department of Commerce has recently decided to impose a high tariff of up to 50% from the 23rd on refrigerators, dryers, washing machines, dishwashers, and freezers, which are added to the list of steel derivatives, raising an alarm in the home appliance industry. Although Samsung Electronics produces some home appliance products in the U.S., a significant volume is exported to the U.S. from Korea and Mexico. The TV business is also facing a deteriorating competitive environment due to aggressive low-price policies from Chinese companies.