With a market value plummeting by over a trillion US dollars, Samsung, the "slow-paced" player in artificial intelligence, cannot escape the "bloody lesson"

According to the financial news app Zhitong Finance, Samsung Electronics has become a clear example of a company that once had a technological advantage but is now losing significant opportunities in the industry. The stock price of South Korea's largest company has dropped by 32% from this year's high on July 9th, evaporating $122 billion in market value, surpassing any chip manufacturer globally. Currently, there is growing concern about the company's situation in the artificial intelligence battlefield. Samsung is losing to smaller competitors like SK Hynix in the memory sector and is unable to surpass TSMC (Taiwan Semiconductor Manufacturing Company) in outsourced chip manufacturing. Just a few months ago, Samsung Electronics seemed poised to benefit from the global AI boom: profits were soaring, and the stock price reached a historic high. Samsung has pledged to undergo comprehensive reforms to regain competitiveness, but international fund management companies such as Pictet Asset Management Ltd. and Janus Henderson Investors SP Ltd. are not entirely convinced of the company's quick turnaround promises. Since the end of July, overseas investors have net sold approximately $10.7 billion worth of Samsung Electronics shares. Sat Duhra, portfolio manager at Janus Henderson Investors SP in Singapore, stated, "Over the past few months, we have reduced our position in Samsung by more than half, which is the largest position in our July strategy." Although Duhra mentioned that the stock valuation has dropped to attractive levels, he currently has "no intention" to buy. Rapid Decline While smartphones and other consumer electronics still account for the largest share of Samsung's revenue, semiconductors have contributed the most to profits in recent years. Due to a recent crisis in its chip business, the company issued a rare apology to investors earlier this month for disappointing performance. The company's story highlights that artificial intelligence is a key factor determining winners and losers in today's chip industry. As foreign investors withdraw from Samsung, NVIDIA has become one of the largest companies globally. TSMC is the primary manufacturer of chips designed by NVIDIA and Apple, with a market value increase of over $330 billion this year. Samsung's situation deteriorated rapidly. After announcing a 15-fold increase in operating profit in the second quarter, its stock price reached a historic high. As recently as August this year, investors optimistically believed that Samsung might win more business and provide high-bandwidth memory for use with NVIDIA's AI processors. In early October, shortly after SK Hynix announced the start of mass production, the company admitted to delaying the production of the latest generation HBM chips, shattering that hope. Meanwhile, American competitor Micron Technology is intensifying efforts in the HBM field and reports strong demand for its products. Young Jae Lee, Senior Investment Manager at Pictet Asset Management's Global Emerging Markets High Dividend team in London, stated that Samsung is "losing its technological leadership in the semiconductor industry." "Essentially, it is difficult to regain technological leadership in the short term," he said, adding that the company has been reducing its holdings of Samsung shares Management Dilemma In addition to lagging behind in artificial intelligence memory, Samsung is also working hard to narrow the gap with TSMC in the foundry business, a costly effort that has been ongoing for several years. Similar to Intel's struggles in expanding its outsourcing chip manufacturing business, this South Korean company is now taking measures such as layoffs to stop the bleeding. Samsung will hold a conference call on Thursday after announcing detailed earnings for the third quarter. It is worth noting that with ongoing uncertainty at the company's leadership level, a management restructuring is expected to take place by the end of the year. Jay Y. Lee, the grandson of Samsung's founder, was appointed as the CEO two years ago. After years of legal disputes, he was acquitted in February this year and the stock manipulation charges against him were dropped. Three months later, Samsung Electronics unexpectedly replaced the head of the semiconductor division with industry veteran Jun Young-hyun, who specializes in memory chips. There may still be a lot of work for the management to do in regaining investor confidence, as the company's stock valuation is close to historic lows and technical indicators also show oversold signals. Park Jinho, stock investment director at Seoul NH-Amundi Asset Management, said, "With Samsung executives and engineers leaving the company, we haven't seen much change." Park downgraded Samsung's stock from neutral to underweight at the end of the second quarter and instead increased holdings in SK Hynix