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| Samsung Electronics' office building in Seoul / Korea Times file |
By Park Jae-hyuk
The top executives of Samsung Group's affiliates held an emergency meeting earlier this week to discuss potential risks in the conglomerate's flagship semiconductor business and brace for the looming global economic recession, according to industry officials, Wednesday.
This is the first time in six years that Samsung gathered the top executives of all of its affiliates, although the nation's largest business group had convened such meetings with electronics affiliates in June and electronics and financial services subsidiaries in September.
Samsung Electronics Chairman Lee Jae-yong was absent from the latest meeting, which took place at Samsung Human Resources Development Institute in Yongin, Gyeonggi Province, due to his trip to Southeast Asia. Samsung Electronics Vice Chairman Chung Hyun-ho, however, reportedly told the top executives on behalf of Lee that they should search for new technologies to ensure the group's survival.
The participants at the meeting are said to have reviewed this year's earnings performance, talked about next year's business plans and listened to Samsung Global Research's forecast for industry conditions both here and abroad. Outside experts were also reportedly invited to deliver lectures on the climate crisis and the energy industry's future.
"It is difficult for us to confirm details of the recent meeting," a Samsung Electronics official said.
The latest emergency meeting was held as Samsung Electronics' mainstay semiconductor business faces a pessimistic outlook in the aftermath of the global economic downturn.
Last week, Goldman Sachs said Samsung Electronics' fourth-quarter operating profit is expected to decline 58.3 percent year-on-year to 5.8 trillion won ($4.6 billion). The U.S. investment bank anticipated in particular that the Korean firm's operating profit from its semiconductor business would fall 83 percent year-on-year to 1.5 trillion won.
Domestic securities firms, which have rarely published negative reports on Samsung Electronics, also expect its semiconductor business to suffer an operating loss from the first quarter of 2023, for the first time in 14 years.
"Starting from a fourth-quarter operating loss at the NAND flash business, the company is expected to suffer an operating loss at the semiconductor business during the first quarter of next year," Daishin Securities analyst Wi Min-bok said.
BNK Securities analyst Lee Min-hee also said Samsung Electronics will lose money from its semiconductor business during the first quarter of next year, because of the worsening profitability of both the memory and non-memory chip sectors.
Amid the gloomy outlook, Samsung Electronics has already shifted into emergency mode.
The company decided to halve performance-based bonuses paid to employees in the second half of this year, compared to the amount given during the first quarter. It also canceled plans to send 120 experts to foreign countries.
The tech firm's device experience (DX) division asked employees to halve the cost of office supplies, including printer paper. Its mobile experience (MX) division was ordered to reduce costs and the number of employees participating in global exhibitions, such as CES in Las Vegas, MWC in Barcelona and the IFA in Berlin.
Samsung also held its global strategy meeting for the second half of the year online, in an apparent attempt to save on airfare and accommodation fees for executives coming to Korea to attend the meeting.
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