Samsung Electronics Co., Ltd.

Company Profile
Publication Date: 12 Aug 2011

www.datamonitor.com
Europe, Middle East & Africa 119 Farringdon Road London EC1R 3DA United Kingdom t: +44 20 7551 9000 f: +44 20 7551 9090 e: euroinfo@datamonitor.com Americas 245 5th Avenue 4th Floor New York, NY 10016 USA t: +1 212 686 7400 f: +1 212 686 2626 e: usinfo@datamonitor.com Asia Pacific Level 46 2 Park Street Sydney, NSW 2000 Australia t: +61 2 8705 6900 f: +61 2 8088 7405 e: apinfo@datamonitor.com

Samsung Electronics Co., Ltd.

ABOUT DATAMONITOR
Datamonitor is a leading business information company specializing in industry analysis. Through its proprietary databases and wealth of expertise, Datamonitor provides clients with unbiased expert analysis and in depth forecasts for six industry sectors: Healthcare, Technology, Automotive, Energy, Consumer Markets, and Financial Services. The company also advises clients on the impact that new technology and eCommerce will have on their businesses. Datamonitor maintains its headquarters in London, and regional offices in New York, Frankfurt, and Hong Kong. The company serves the world's largest 5000 companies. Datamonitor's premium reports are based on primary research with industry panels and consumers. We gather information on market segmentation, market growth and pricing, competitors and products. Our experts then interpret this data to produce detailed forecasts and actionable recommendations, helping you create new business opportunities and ideas. Our series of company, industry and country profiles complements our premium products, providing top-level information on 10,000 companies, 2,500 industries and 50 countries. While they do not contain the highly detailed breakdowns found in premium reports, profiles give you the most important qualitative and quantitative summary information you need - including predictions and forecasts.

All Rights Reserved. No part of this publication may be reproduced, stored in a retrieval system or transmitted in any form by any means, electronic, mechanical, photocopying, recording or otherwise, without the prior permission of the publisher, Datamonitor plc. The facts of this profile are believed to be correct at the time of publication but cannot be guaranteed. Please note that the findings, conclusions and recommendations that Datamonitor delivers will be based on information gathered in good faith from both primary and secondary sources, whose accuracy we are not always in a position to guarantee. As such Datamonitor can accept no liability whatever for actions taken based on any information that may subsequently prove to be incorrect.

Samsung Electronics Co., Ltd. Datamonitor

Page 2

Samsung Electronics Co., Ltd.

TABLE OF CONTENTS

TABLE OF CONTENTS
Company Overview..............................................................................................4 Key Facts...............................................................................................................4 SWOT Analysis.....................................................................................................5

Samsung Electronics Co., Ltd. Datamonitor

Page 3

Samsung Electronics Co., Ltd.

Company Overview

COMPANY OVERVIEW
Samsung Electronics Company (Samsung Electronics or the company), a part of the Samsung group, is one of the leading consumer electronics brands in the world. The company operates in Asia, Europe and Americas. It is headquartered in Seoul, South Korea. The company recorded revenues of KRW154,630,328 million ($139,167.3 million) during the financial year ended December 2010 (FY2010), an increase of 13.4% over FY2009. The operating profit of the company was KRW17,296,536 million ($15,566.9 million) in FY2010, an increase of 58.3% over FY2009. The net profit was KRW15,799,035 million ($14,219.1 million) in FY2010, an increase of 65.1% over FY2009.

KEY FACTS
Head Office Samsung Electronics Co., Ltd. Samsung Electronics Building 1320-10 Seocho 2-dong Seocho-gu Seoul 137 857 KOR 82 2 2255 0114

Phone Fax Web Address

http://www.samsungelectronics.com

Revenue / turnover 154,630,328.0 (KRW Mn) Financial Year End Korea Ticker December 005930

Samsung Electronics Co., Ltd. Datamonitor

Page 4

Samsung Electronics Co., Ltd.

SWOT Analysis

SWOT ANALYSIS
Samsung Electronics Company (Samsung Electronics or the company), a part of the Samsung group, is one of the leading consumer electronics brands in the world. The company is the global leader in monitors and televisions. It is the world's largest producer of DRAM, SRAM, and flash memory. Strong market position strengthens the company's brand image and gives it an edge over its competitors. However, increasing competition may affect the market share of Samsung Electronics. Strengths Robust market position bolstered by the strong brand equity Constant focus on research and development Diversified business portfolio across multiple product categories Opportunities Strategic alliances which enhances the company's product offerings Launch of Galaxy Tab in the emerging tablet PC market Growing global mobile phone market Weaknesses Instances of product recalls reflect poorly on brand image of the company Unfunded employee post retirement benefits

Threats Highly competitive business environment Stringent environmental regulations Currency risk

Strengths

Robust market position bolstered by the strong brand equity Samsung Electronics is one of the leading players in semiconductor, telecommunication, digital media and digital convergence technologies. The company enjoys a strong market position in most of its product segments. It is the global leader in monitors and televisions, and is the world's largest producer of DRAM, SRAM, and flash memory. The company is also a leading player in the handsets and smartphones market. According to DisplaySearch, the company is the top player in the global television market with 22.1% market share, and global large LCD panel market with 25.7% market share. Besides, it holds 20% share in the global laser printer market, 39.5% in global four-door refrigerator market, 20.6% in global mobile phone industry, 9.4% in global semiconductor industry, and 25.7% in the global large LCD panel market. In addition to the robust market position, the company has built strong brand equity over the years. Also, in its 2010 survey of the Worlds Most Admired Companies, Fortune magazine ranked Samsung

Samsung Electronics Co., Ltd. Datamonitor

Page 5

Samsung Electronics Co., Ltd.

SWOT Analysis

Electronics 32nd, up from 40th in 2009. In the industry breakdown, Fortune ranked Samsung Electronics as the second most admired company in the global electronics industry. The robust market position coupled with strong brand equity imparts significant competitive edge to the company in terms of scale and recognition, which in turn augers well for the company's expansion plans. Constant focus on research and development Samsung Electronics has been regularly strengthening its research and developments (R&D) function. The company devotes significant resources and attention to develop consumer-preferred products with innovative and distinctive features. It is evident from the fact that, the company invested approximately 5.9% of its revenue in R&D activities in FY2010. The company's R&D expenditure was KRW9,099,352 million ($8,189.4 million) in FY2010, an increase of 23.2% over FY2009. Such focus on R&D activities helped the company to launch various new products in the recent past. For instance, in January 2011, the company launched the new SH100, a compact Wi-Fi enabled camera. Later in the same month, Samsung Electronics developed the industrys first DDR4 DRAMmodule, using 30 nanometer (nm) class process technology. The company launched two latest point-and-share camcorders, The Full HD HMX-P300 and HMX-P100. Samsung Electronics also launched a line of TV accessories including, Lightweight, Prescription 3D Active Glasses, Touch Control, Wireless Charger for 3D Active Glasses and High-Definition TV Camera. In February 2011, the company along with MetroPCS Communications introduced the first commercially available 4GLTE enabled Android smartphone, the Samsung Galaxy Indulge. Also, it announced two new compact cameras, the PL20 and ES80, stylish point-and-shoot cameras. The company launched GALAXY S WiFi 4.0 and a fresh addition to its smart player portfolio, the GALAXY S WiFi 5.0., in May 2011. In the following month, Samsung Telecommunications America and T-Mobile USA announced two new feature-rich Android-powered handsets, the Samsung Exhibit 4G and Samsung Gravity SMART. Large-scale capex and R&D spending allows the company to cater to changing preferences with ease, which in turn enhances its competitive advantage and increases its profitability. Diversified business portfolio across multiple product categories Samsung Electronics is one of the leading telecommunications equipment and consumer electronics companies in the world with revenues of $139,167.3 million in FY2010. The company is engaged in the manufacture of semiconductors, LCD panels and other products.The company mainly operates in two businesses; digital media and communications, and device solutions. The digital media and communications segment primarily offers a range of digital media and telecommunication products including digital TVs; monitors; audio-visual devices; printers; mobile phones; network systems; MP3 players; digital set top boxes; computers; and other telecommunication systems. It also provides a range of consumer home appliances like refrigerators, air conditioners, washers, ovens, vacuum

Samsung Electronics Co., Ltd. Datamonitor

Page 6

Samsung Electronics Co., Ltd.

SWOT Analysis

cleaners. The device solutions segment operates in the storage, memory, integrated circuits, LCD technologies, notebook PCs and desktop monitor products, among others. A broad and diversified business portfolio of products services not only enhances market share of the company across various markets, but it also gives diverse revenue stream to the company. This in turn limits the company's exposure to the risks associated with a particular segment.

Weaknesses

Instances of product recalls reflect poorly on brand image of the company Samsung Electronics was involved in several instances of product recalls in recent past. For instance, the company has issued a voluntary recall of its 160,000 Jitterbug phones. The company recalled these phones after regulators determined that they could fail to connect to Emergency 911 in a no-service area. The US Consumer Product Safety Commission stated that the recall involves Jitterbug cell phones model numbers SPH-a110 and SPH-a120 with standard key pads and version BB14 software. Later, the company recalled its 1000 watt over-the-range microwave ovens distributed in the US market. During the same month, the company recalled Jiperu refrigerators in the South Korean and Chinese market after incidents of explosion occurred in the model. Significant product recalls like these negatively affects the consumer confidence in the company's products and tarnish the brand image of the company. Unfunded employee post retirement benefits The company has significant unfunded pension obligations. Samsung Electronics provides retirement benefits for most of their employees, either directly or by contributing to independently administered funds. In FY2010, the companys pension benefit obligations stood at KRW2,293,468 million ($2,064.1 million) as compared to the planned assets of KRW1,797,706 million ($1,617.9 million), resulting into an unfunded status of KRW495,762 million ($446.2 million). Volatility in financial markets (equity and debt) led to decline in pension fund asset values. Unfunded pension obligations will force the company to make regular cash contributions to bridge the gap between pension assets and liabilities, pressurizing the liquidity position of the company.

Opportunities

Strategic alliances which enhances the company's product offerings

Samsung Electronics Co., Ltd. Datamonitor

Page 7

Samsung Electronics Co., Ltd.

SWOT Analysis

Samsung Electronics has entered into strategic agreements with some of the well known companies of the world in the recent past. For instance, in April 2011, the company entered into an agreement with Seagate Technology to expand their strategic relationship. Seagate Technology is one of the world's largest manufacturers of hard disk drives. The agreement will extend and enhance the existing patent cross-license agreement between the companies. The two companies will strengthen efforts to co-develop enterprise storage solutions. Samsung Electronics will supply NAND to Seagates solid state drive products, and Seagate will supply hard disk drives to Samsung Electronics PCs and notebooks. Earlier, the company signed a patent cross license agreement with Toshiba for semiconductor technologies. Toshiba is the leading player in the NAND flash memory market with thousands of patens under its name. Toshiba is also in the forefront of innovations in this product category with several new technologies under its credit. By signing the cross licensing patent agreement with Toshiba, Samsung Electronics continues to have access to important NAND flash process technology as well as multi-level cell flash memory design IP relevant for future NAND flash generations. The company has been able to form strategic alliances with some globally renowned players who are strong in their respective domains. Alliances such as these will not only help the company tap newer avenues of business but also help the company adapt newer landscapes for revenue growth. Launch of Galaxy Tab in the emerging tablet PC market The company introduced its first tablet computer Galaxy Tab during 2010. The device, which uses Google's Android software, offers access to books, films and music and directly competes with Apple's i-Pad. The Galaxy Tab, which is expected to be in the lower price range as compared to the i-Pad, could emerge as an operator-friendly and cheaper alternative to Apple's i-Pad. The company has forged partnerships with the top four US mobile carriers and with media companies which are providing programming for its Media Hub service. The company's pricing strategy coupled with strong distribution network and brand equity imparts significant competitive edge to target the lucrative tablet PC market globally. Growing global mobile phone market The global mobile phone market is witnessing a robust growth. According to Datamonitor estimates, the global mobile phone market was valued at $101 billion in 2008. In 2013, the market is forecast to have a value of $157 billion, an increase of 55.3% since 2008. Samsung Electronics is one of the leading producers of mobile handsets in the world, with 20.6% market share. In FY2010, the company achieved sales of 280 million mobile phones worldwide, up 23% over FY2009, and a double-digit increase in operating profits. With its strong market position, Samsung Electronics is well positioned to harness the benefits of growing global mobile phone market.

Samsung Electronics Co., Ltd. Datamonitor

Page 8

Samsung Electronics Co., Ltd.

SWOT Analysis

Threats

Highly competitive business environment The company's business segments operate in a highly competitive business environment and face intense competition from a growing number of competitors, many of whom have strong consumer brand equity. Several of these competitors, such as LG Electronics, Whirlpool, Motorola, Nokia, and Sony, are large, well-established companies that rank among the Global Fortune 150. Competition in the global market is based on a number of factors including performance, innovation, product features, quality, cost, selling price, distribution, and financial incentives, such as cooperative advertising, marketing funds, sales person incentives, volume rebates, and terms. In the past, Samsung Electronics' competitors, especially global competitors with low-cost sources of supply, have aggressively priced their products and introduced new products in order to increase market share. Hence, increasing competition may lead to price wars, which in turn could negatively affect the market share of Samsung Electronics. Stringent environmental regulations The company's operations are subject to various environmental laws, including laws on air pollution, water pollution, toxic substances, waste disposal, product recycling, prevention of global warming and energy policies, in its global business activities. These laws and regulations impose increasingly stringent environmental protection standards on the company regarding air emissions, wastewater discharges, the use and handling of hazardous waste or materials, waste disposal practices and the remediation of environmental contamination. These standards expose Samsung Electronics to the risk of substantial environmental costs and liabilities, including in relation with divested assets and past activities. In most of the jurisdictions in which the company operates, its industrial activities are subject to obtaining permits, licenses and/or authorizations, or to prior notification. These regulations could become more stringent or additional regulations may be adopted in the future. A failure to comply with these regulations may result in fines or other penalties, which will adversely affect the company's business, financial condition and results of operations. Currency risk Samsung Electronics is an enterprise with worldwide operations. The company is exposed to foreign exchange risk arising from various currency exposures, primarily with respect to the US, European Union, Japan, other Asian countries and South America. Since a significant portion of the companys revenues are generated outside the Korean Won currency region and the procurement of production material and funding are also organized on a worldwide basis, the currency risk is an extremely important factor for Samsung Electronics earnings. The effect of changes in demand and refinancing

Samsung Electronics Co., Ltd. Datamonitor

Page 9

Samsung Electronics Co., Ltd.

SWOT Analysis

conditions and fluctuations in exchange rates has a significant impact on the companys earnings. This is related in particular to the US dollar, Euro, the Japanese yen, the Chinese yuan, and other world currencies, against the Korean Won. The value of the companys equity investment in foreign countries may fluctuate based upon changes in foreign currency exchange rates. These fluctuations, which are recorded in a cumulative translation adjustment account, may result in losses in the event a foreign subsidiary is sold or closed at a time when the foreign currency is weaker than when the company initially invested in the country. Any unfavorable change in other currencies would have an adverse affect on the profitability of the company.

Samsung Electronics Co., Ltd. Datamonitor

Page 10

Copyright of Samsung Electronics Co., Ltd. SWOT Analysis is the property of Datamonitor Plc and its content may not be copied or emailed to multiple sites or posted to a listserv without the copyright holder's express written permission. However, users may print, download, or email articles for individual use.