Samsung execs talk strategy as Iran war ends, Chinese competition grows

Samsung Electronics opened its global strategy meeting on Tuesday, gathering senior executives to set the company's direction for the second half of the year amid shifting industry conditions and the end of the Iran war.

The closed-door sessions, which run through Thursday, are meant to take stock of the major issues facing the company, from a market transformed by the end of the war between the United States and Iran to the fast-closing gap with Chinese rivals and surging demand for AI.

The talks began on Tuesday with the Mobile Experience (MX) division, which makes smartphones, and continue on Wednesday with the Visual Display (VD) and Digital Appliances (DA) divisions and Thursday with the Device Solutions (DS) division, which runs the chip business. Samsung holds the meeting every June and December, bringing top managers together to review each division's results and chart strategy.

This round is expected to center on how the landscape will shift after the war in Iran stops. The end of the war between the United States and Iran has eased worries about global supply chains and lifted hopes for a rebound in consumer spending. The Device eXpereince (DX) division, which spans finished products such as smartphones, televisions and home appliances, is likely to concentrate on tailoring sales strategies market by market.

The DX division's biggest test is the charge from Chinese manufacturers. Samsung's VD business has led the global TV market for 20 years running, but TCL and Hisense have been quickly gaining share by competing on price. By shipments, Counterpoint Research put Samsung's first-quarter TV share at 16.8 percent, just 2.7 percentage points ahead of TCL at 14.1 percent.

Home appliances are no easier. Samsung faces a low-price push from Chinese firms on top of rising component costs. The company is expected to lean on premium lines such as its Bespoke washing machines, refrigerators, and air conditioners to protect margins, while moving faster into higher-growth areas such as heating, ventilation, and air conditioning (HVAC) and appliance subscription services.

For the MX division, the harder question is pricing. Samsung has been absorbing pressure to raise prices by drawing on the parts inventory it built up through the first quarter, but that cushion will thin in the second half. With memory and other key component prices still climbing, some in the industry expect Samsung to rethink how it prices its phones. The balance between profit and sales volume will be especially delicate as it prepares to launch its flagship foldables, the Galaxy Z Fold 8 and Z Flip 8, in the second half.

The DS division, which has kept up strong earnings on the back of memory chips, will look closely at how to supply a market hungry for AI. Executives are expected to revisit plans to produce and deliver high bandwidth memory to big U.S. technology firms. The foundry business, which makes chips to order and badly needs to climb out of the red, is another central item. The discussion is expected to focus on winning customers and improving yields to bring forward the point at which it turns a profit.

BY LEE YOUNG-KEUN [[email protected]]