[Science Summit] Samsung Electronics at forefront of innovation

The company recently posted third-quarter earnings guidance that beat analysts’ estimates.

The company estimated its profit rose almost 80 percent to 7.3 trillion won ($6.3 billion) from 4.06 trillion won a year ago. Sales were also expected to have risen 7.5 percent to 51 trillion won.

Buoyed by the improved earnings, Samsung is beefing up efforts to continue the recent upbeat momentum across all its business areas.

Unrivaled in semiconductors

Samsung entered the semiconductor business in the 1970s when the market was dominated by U.S. and Japanese companies. Decades later, the company has overtaken its rivals.

According to market research firm IHS, Samsung is the world’s second-largest chipmaker after Intel. Their difference in market shares was a mere 1.6 percent in the second quarter this year.

Over the past years, Samsung has built a global production network, setting up manufacturing plants in Korea, the U.S. and China and responding more promptly to its clients around the world.

In 2014, its Xian plant started operations with support from the Chinese government. The company plans to create a new semiconductor manufacturing cluster in Pyeongtaek, Gyeonggi Province, with a fresh investment of 17 trillion won.

Samsung has enjoyed an unrivaled market position especially when it comes to key memory chip products, including DRAM logic chips and NAND flash memory chips.

In March last year, the company started mass-producing the world’s first 20-nanometer DRAM, a high-speed, power-saving memory chip in a slim profile that supports next-generation mobile devices. 

Samsung is still the sole producer of the new chip. The company also unveiled 12-gigabyte 20-nanometer mobile DRAM – the highest-density chip on the market – in September.

Samsung’s V-NAND technology, announced in 2013, also shows the company’s chip supremacy. The new technology overcomes the capacity limitations of traditional 2-D NAND technology with its revolutionary vertical design.

The technology is especially useful for solid-state storage. Solid-state drives using the technology boast higher speed and safety, fast replacing conventional hard drives. The company expected a double-digit growth every year in related sales.

World’s largest smartphone-maker

Samsung, the world’s largest smartphone-maker, is expanding its product lineup to meet the ever-evolving market conditions and consumer trends.

According to market research firm Strategy Analytics, Samsung was the No. 1 smartphone-maker with a 21.3 percent market share in the second quarter, followed by Apple (14.1 percent), Huawei (9 percent), Xiaomi (5.9 percent) and Lenovo (4.8 percent).
 

Following the April launch of its flagship Galaxy S6 phones, the company started sales of the Galaxy Note 5 and S6 Edge Plus phablets in August.

With consumer demands growing for larger-screen handsets, the new Samsung phones, equipped with improved display, camera, charging and processor features, are gaining positive reaction and driving up Samsung’s device sales overall.

While the Edge Plus boasts a unique styling with a curved screen, the Note 5 has upgraded its signature S Pen stylus.

The pen has more diverse functions as it works with Microsoft’s PowerPoint and Excel programs. Users also can scribble on the screen even when the phone is not activated.

Adding to their charm is high-speed charging. It takes 90 minutes to fully charge the larger phones. Even when using wireless charging, it takes only 120 minutes.

Another latest device is Samsung Gear S2, the company’s first circular design smartwatch that was unveiled in September at the IFA electronics trade show in Berlin.

Samsung, which was the first to open up the global smartwatch market in 2013, has come up with the industry’s first smartwatch with a rotating bezel ring that offers a unique user experience.

Turning the bezel to the left allows users to view at-a-glance notifications for messages and voice calls, while turning to the right shows notifications from other apps. Two additional buttons – the home and back buttons – help with navigation.

Users can type or narrate using the built-in keyboard and voice recognition system.

Samsung plans to develop more diverse features customized for the round display and the rotating bezel ring in partnership with app developers.

Tapping into mobile pay

Samsung Pay, Samsung’s own mobile payment system, made its debut in August as part of the company’s latest software push.

It is a mobile wallet application that allows users to pay for goods and services by waving their smartphone near a register instead of swiping a credit card or pulling out cash.

In Korea, the service is already gaining a footing. More than 2,500 people newly register to use the service every day, with the average daily transactions surpassing 750 million won.

Samsung Pay was released in the U.S. last month. Launches in other markets are set to come in phases.

Key to the service is its compatibility with existing credit card terminals. Unlike its competitors like Apple Pay and Google Wallet based on Near-Field Communication terminals only, Samsung Pay uses Magnetic Secure Transmission system that doesn’t require extra hardware installation.

While other mobile wallets services have yet to be widely adopted due to this technological problem, Samsung Pay has an upper hand to secure a wider user base in the early stage of adoption.

Samsung Pay also supports NFC payments for transactions. The service has a fingerprint identification system for security.

Samsung has inked a deal with every card company in Korea for the service, while expanding ties with local firms in the U.S.

The company has the service preinstalled on its flagship smartphone Galaxy S5, its Edge variant and new bigger-screen phones – the Galaxy Note 5 and Edge Plus.

The company expected Samsung Pay would attract more Samsung phone loyalists and elevate device sales overall.

Upscale push in home appliances

Samsung aims to strengthen its No. 1 position in the home appliances market with more premium products that take greater care of user convenience.

The Samsung Chef Collection is the company’s high-end home appliances line consisting of a refrigerator, dishwasher, stove and microwave, developed in collaboration with world-renowned chefs.

In particular, the luxurious 1,000-liter refrigerator – the largest capacity on the market – is a hot seller in Korea.

The refrigerator uses Metal Cooling technology that features stainless steel panels to help maintain a consistent temperature, while Triple Cooling technology uses three evaporators and two compressors to control humidity, which is an industry first.

Chef-inspired features include Chef Mode that allows the storage of different food items at chef-recommended temperatures in four compartments to yield the best-tasting results.

When it comes to its washing machines, creative ideas are directly linked to increased sales.

The Active Wash, a top-load washer with a built-in sink for soaking or prewashing, recently reached 100,000 unit sales in Korea since its launch in February.

A built-in sink and jet allows users to hand-wash, prewash or wash tough stains directly without having to travel to the kitchen or bathroom for a water source.

Another clever washer, the Add Wash, debuted in August. It is a front-load washing machine with an extra door to put in additional laundry in the middle of a wash cycle.

Business strategy in latter half

Samsung predicted business environments would be no better in the latter half amid increased economic uncertainties. The company plans to streamline its business portfolio and ramp up R&D efforts for new products.

The company expected DRAM demands to increase in the latter half, especially led by high-end smartphones and PCs. The company will beef up production of value-added chip products.

When it comes to V-NAND chips, the company also plans to strengthen pricing competitiveness.

The global smartphone market is expected to post modest growth in the latter half, making competition ever fiercer.

While maintaining its leadership in premium phones, the company plans to diversify its low-end lineup to meet diverse consumer demands in different markets.

The growth of the home appliances market is predicted to be flat. The company will focus its marketing activities on emerging markets to expand revenue sources.

By Lee Ji-yoon (jylee@heraldcorp.com)