South Korea’s most valuable company by a landslide, Samsung Electronics, has become a global brand of technological excellence for more than 20 years. The rising popularity of its smartphones has opened the gates of success for Samsung, and it may be surprising to find out that Asia’s 4th most valuable company today, as seen on Alpho’s Top 20 Asian Brands, was founded as a grocery trading store all the way back in 1938.

Humble Beginnings

Founder Lee Byung-chul established Samsung in Daegu, Korea, before the split of the Asian nation into two, trading noodles and other goods produced around the city and exporting them to Chinese provinces. The Korean war was the turning point for the company, which prompted it to expand into textiles, industrialization, banking, insurance, petrochemicals, and of course, electronics.

As of mid-2022, the multinational conglomerate with over 250 subsidiaries is worth more than $350 billion, and is not only the largest firm in South Korea, but is considered as the 19th most valuable company on the global stage with over 280,000 employees around the world.

The Smartphone Era & The Rise of Samsung

Apple revealed its iPhone innovation to the public in 2007, and this revolutionized the phone market forever. People were amazed by the new technology introduced, such as the touch screen and an all-new operating system. Away from the crowd, Google was working on its own operating system, known as Android today.

Samsung adopted the Android operating system and launched its first Android smartphones. It released the Galaxy S series of multiple devices in mid-2010 to take on the popular iPhone. The Galaxy series became one of Samsung’s pillars of success, and remains to be a huge driver of the company’s global presence.

For decades, the company successfully marketed its wide range of phones & technologies of different price ranges across the globe, which especially appeal to price-sensitive nations, markets and consumers.  This strategy has made Samsung the behemoth we know today.

Samsung’s 2022 Performance

It’s worthy to first note the 2021 fourth quarter results of Samsung. The company recorded a 53% escalation in year-over-year operating profits, as record sales of devices powered by Samsung’s semiconductor chips aided the electronics tycoon in overcoming the pandemic-fueled supply chain obstacles. In the October to December 2021 period, Samsung enjoyed significant success “thanks to competitive product, despite continuing uncertainty”, as said by the company in a statement.

People working from home due to national lockdowns and mobility restrictions has evidently boosted the demand for Samsung’s products, including smartphones, televisions, and washing machines; all powered by Samsung’s semiconductor chips. The COVID-19 pandemic created chaos in the global economy, but has played an important role in the boom of Samsung and other tech companies. This is also evident in the company’s first quarter results in 2022.

Samsung’s profits topped consensus expectations, generating 14.1 trillion won ($11.6 billion) in profits, which is a cool $1.2 billion above average analyst expectations. This quarterly profit marks the company’s highest first-quarter profit since 2018. The success can be attributed to high demand and increasing shipments of memory chips, priced favorably for Samsung.

Technical Analysis

Looking at the Samsung stock (SMSN.IL) from a technical perspective, it can be noticed that the stock is exhibiting a clear negative trend since the start of 2021. Currently priced at $1,286, the chart from TradingView shows that the stock is trading between a resistance level of $1,505, and two support levels; one lies near $1,400, and another close to $1,250.

The valuation of the South Korean electronics and technology pioneer has been hampered in 2022, amid the global stock market decline due to escalating geopolitical and macroeconomic instabilities. Limited energy, mounting sanctions and record-high inflation has driven most markets in a downward manner, even for safe havens like gold.

New Products

Samsung has unveiled two new products in May, which could play a vital part in re-surging the stock & valuation of the global technology leader to the highs witnessed in early 2021. The first is the PRO Endurance memory card, which was released on the 3rd of May. The new microSD card is focused on bolstering the endurance & performance of cameras, including surveillance, body and dashboard cameras.

On May 10th, the company announced the development of the industry’s first-ever 512GB memory chip. The CXL DRAM (Computer Express Link) DRAM (Dynamic Random Access Memory) of Samsung is the first to have a capacity of 512 gigabytes, and this serves as “an important step towards the commercialization of CXL which will enable extremely high memory capacity with low latency in IT systems”, the company noted in a news article.

The 6G Plan

Perhaps the most exciting endeavor revolves around new technology, and Samsung has lately released a white paper which presents the company’s vision for attaining global frequency bands for 6G communications technology. The technology chief noted that it’s sophisticated 6G technology improves the coverage & quality of high-rate data signals by a whole 1.9 times, ensures energy savings of more than 10%, among other improvements.

The major challenge faced by Samsung is the escalating macroeconomic and geopolitical instability, which has adversely impacted most industries in 2022, including safe-haven assets like precious metals and certain currencies. Yet, the company’s new products & innovations, such as the ‘Bespoke French Door’ refrigerator and ‘The Freestyle’, a portable projector that weighs just 2 pounds, can be the new drivers for Samsung. It all depends on consumer demand, how much they enjoy the products, and the whole macroeconomic environment and its conditions.

Lưu Đỗ Hoàng Anh, Financial Analyst from Alpho

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