Between the years 1980 to 2005, Samsung entered the memory chips market and has quickly ascended to the position of market leader. This paper will analyze the factors behind this success and analyze how this position can be affected by recent market developments.
A memory chip is a standardized product with perfectly defined qualities and known buyers. The competition between producers is mostly focused on price and therefore affects the upstream capacity of each producer to control the costs of production.
[...] Chinese players are already poised to emulate some of the historical advantages of Samsung Samsung was the first Korean player in the market for memory chips, giving it access to a cheap labor market in relation to established players at the time, and also motivating engineers to demonstrate their capabilities to their U.S., Japanese, and German counterparts. Today, this advantage is in favor of Chinese players. The Chinese players are as prepared as Samsung in its infancy to bear heavy losses in order to gain market share Samsung has initially acquired certain licensed technologies from Micron. [...]
[...] In addition, traditional competitors from Samsung are already in partnership with Chinese partners, and could offset the relative inefficiency of their cost structure compared to that of Samsung. b. Capital intensive output The alliance with a Chinese actor seems inevitable even if the risk is to eventually create a "new Samsung" to determine how to avoid this? 3. Recommendations: Samsung may forge an alliance with a Chinese actor in order to maintain its competitive advantages A. Samsung must above all maintain its strategy of differentiation and premium prices a. [...]
[...] Samsung agreed to provide past generations of chips, which are highly valued by customers because it exempts them from the need to adapt their products to all waves of bullets. OEMs are thus part of a loan to pay more for these obsolete chips as they avoid heavy investments. Besides customers are forced to remain faithful to Samsung, as it is the only supplier of these chips of the last generation. c. Samsung has the ability to produce high quality products, which also justifies a premium price The Samsung chips are more reliable, as evidenced by the contest won by Samsung. [...]
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