Samsung’s $122-B Wipeout Shows The Cost of Sleeping On AI

Just a few months ago, Samsung Electronics Co. appeared poised to benefit from the global AI boom: profits were surging, and its stock was nearing an all-time high.

Samsung shares have plummeted 32% from their peak on July 9, wiping out $122 billion in market value — more than any other chipmaker worldwide. I Photo: Samsung

Now, South Korea’s largest company has become a stark example of how quickly fortunes can change in an industry where success depends on maintaining a technological edge, Youkyung Lee and Yoolim Lee reported for Bloomberg News.

Concerns are mounting that the company is losing ground to smaller rival SK Hynix Inc. in AI memory and failing to catch up to Taiwan Semiconductor Manufacturing Co. (TSMC) in outsourced chip production.

As a result, Samsung shares have plummeted 32% from their peak on July 9, wiping out $122 billion in market value — more than any other chipmaker worldwide.

While Samsung has pledged to revamp its operations to restore its competitive edge, global investors, including Pictet Asset Management Ltd. and Janus Henderson Investors SP Ltd., remain skeptical about a near-term recovery.

Foreign investors have sold about $10.7 billion worth of Samsung’s shares on a net basis since the end of July.

“We have more than halved our position in Samsung over the last few months — it was the largest position in our strategy in July,” said Sat Duhra, a portfolio manager at Janus Henderson Investors SP in Singapore.

While Duhra acknowledged that the stock has now reached an attractive valuation, he has “no intention” to reinvest for the time being.

Although smartphones and other consumer electronics still account for the largest share of Samsung’s sales, semiconductors have contributed the bulk of its profits in recent years.