Samsung Electronics is currently caught in a vicious cycle of no customers, no technological advantage, and no product yield rate.

In 1974, Lee Kun-hee, then a council member of Toyo Broadcasting Corporation, expressed his desire to acquire Korea Semiconductor to his father, Lee Byung-chull, who was then the chairman of Samsung Group.

However, executives of Samsung, which made its fortune selling rice, stood up and unanimously opposed the idea. Why enter the semiconductor industry? Why spend so much money on something with no future?

A few days later, Lee Byung-chull, ignoring the objections of the executives, acquired Korea Semiconductor in the name of himself and his son. This became the future Samsung Electronics Bucheon Semiconductor Plant. Samsung Electronics' over 50-year semiconductor myth began at the Bucheon plant.

When Samsung Electronics started in the 1970s, its development was not smooth due to Japan's strong technological advantage. However, as Japan and the United States engaged in fierce competition in the semiconductor field, Samsung Electronics was given a chance to catch its breath and develop.

Later, with the third industrial transfer and the introduction of technology from Micron Technology, coupled with its own research and development, Samsung quickly mastered the key semiconductor technologies. By 1993, Samsung Electronics had already become the number one player in the global memory market.

By the second quarter of 2021, Samsung Electronics surpassed Intel with $19.7 billion in revenue, becoming the world's largest chipmaker. Intel lost its position as the leader it had held for over three decades. Samsung Electronics, with its momentum, became a mythical existence in the eyes of South Koreans. One company accounted for nearly 10% of South Korea's GDP.

In addition to chips, Samsung Electronics has multiple business segments including communications, home appliances, and imaging, forming a complete industrial chain. Samsung phones, which are widely known to consumers, are said to be the only company in the world that can complete all stages of production on its own.

However, the peak is also the time when corporate crises breed. Before Samsung Electronics had even had time to warm up in its seat as the global semiconductor leader, news of 30% layoffs and a split emerged. Samsung Electronics' ability in advanced process technology has been far surpassed by TSMC. Meanwhile, research predicts that by the end of the year, Samsung Electronics' memory market may be overtaken by domestic rival SK Hynix.

From being the promising world leader to its collapse, Samsung Electronics took only a few short years. What happened to Samsung Electronics?

Looking back at history, Samsung Electronics was not actually lagging behind in the high-end market. At the start of the second decade of the 21st century, Intel first introduced the FinFET process at the 22nm node and further expanded its lead at the 14nm node. The Core processors with Turbo Boost technology had almost no competitors in the high-end market.

At that time, TSMC's 28nm process was inferior to Intel's 32nm process technology. Although Samsung Electronics was making progress, it was still not comparable to Intel and TSMC at that time.

In business competition, turning points can come at any time. From the current perspective, Intel chose to abandon EUV lithography technology at the 10nm node, which led to Intel no longer being known for its slow pace of innovation and being dubbed the "Toothpaste Factory."

Another detail is that Samsung Electronics accidentally obtained the email address of TSMC's R&D leader Liang Mengsong and later successfully poached him. With Liang Mengsong's joining, Samsung Electronics quickly overcame the 32nm and 28nm processes and later helped Samsung Electronics successfully launch 14nm chips. With the success of the 14nm process, Samsung Electronics even took away the order for Apple's A9 chip from TSMC.

In the subsequent competition for 7nm and 5nm processes, Samsung Electronics was actually not behind. However, due to the Snapdragon 888 incident, the tide suddenly turned.

TSMC's 5nm process continued to be successful, with the A14 processor and Kirin 9000 processor still delivering their performance in iPhone and Huawei flagship phones. Qualcomm, which did not secure orders from Apple and Huawei, was envious but helpless.

Fortunately, after arduous negotiations, Samsung Electronics secured the production of the Snapdragon 888. Interestingly, Qualcomm followed the footsteps of Huawei and Apple by awarding all 5nm process orders to Samsung Electronics.

However, Samsung Electronics still encountered problems. Although the Snapdragon 888 offered stronger performance, it also generated more heat. The Xiaomi 11, which was equipped with the Snapdragon 888, later even reported issues of "burnt WiFi." In 2021, the Snapdragon 888 became one of the hottest topics in the tech circle.

As Qualcomm's flagship SoC, the Snapdragon 888's overheating issue caused immeasurable losses and impacts on Qualcomm. After this incident, Qualcomm also chose to fully embrace TSMC.

As for Samsung Electronics, Qualcomm dared not use it anymore.

After Qualcomm, NVIDIA and Broadcom also turned to TSMC. Apart from mining graphics cards, Samsung Electronics almost lost all its high-end customers. Fortunately, its own Exynos chip was not discontinued and continued to be produced with gritted teeth.

In addition to the Snapdragon 888 incident, the "deception scandal" involving Samsung executives erupted in 2022. Reports claimed that Samsung Electronics executives were suspected of tampering with yield data for 5nm and 4nm process products and exaggerating technological advantages to increase funding for new projects. Such a humiliating incident was like a bolt from the blue for Samsung Electronics. In the end, Samsung had no choice but to dismiss several executives to put an end to the matter.

After its reputation was tarnished, Samsung Electronics received even fewer orders. Until recently, Samsung Electronics announced a "major overhaul" of its chip manufacturing division, estimating that around 30% of employees would be laid off, including executives at the president level.

In the view of the 'Digital Intelligence Research Society,' in addition to the executive deception scandal and the Snapdragon 888 incident, Samsung Electronics' missed opportunity in the booming AI field in recent years has also had a significant impact.

In terms of AI hardware, due to the explosion of AI large models, there is a huge demand for AI model training and inference, which greatly stimulates the demand for HBM high-bandwidth memory. The more complex and higher-level the AI model, the greater the demand for high-end memory. As the leader in storage, Samsung Electronics is definitely a beneficiary. Financial data also demonstrates this point. Although Samsung Semiconductor lost $11.5 billion in 2023, demand for HBM and DDR5 memory surged by 95%.

However, in the HBM field, there are also competitors like Micron and SK Hynix lurking. Samsung Electronics cannot simply reap the benefits.

In addition to AI hardware, Samsung Electronics is virtually silent in the AI software ecosystem. It cannot even compare with NVIDIA, let alone AMD or Qualcomm. Although Samsung has long introduced AI phones, those who have used the latest Samsung flagship phones will surely feel that their AI adaptation is inferior to domestic brands like Xiaomi and OPPO.

In summary, the current Samsung Electronics is caught in a vicious cycle of no customers, no technological advantage, and no product yield rate.