Core Insights - Samsung Electronics has significantly raised its employee patent reward standards, with the maximum reward now reaching three times the original standard, aimed at boosting employee morale and accelerating new technology development in key business areas [1][3] Summary by Sections Patent Reward Adjustments - The company has increased the patent application reward under the "invention incentive fund" to a maximum of double the previous amount, with A1 level rewards rising from 1 million KRW to 1.5 million KRW (approximately 7,353 RMB) and A2 level rewards from 500,000 KRW to 1 million KRW (approximately 4,902 RMB) [3] - This adjustment will be in effect for two years, until September 2027, and is considered unprecedented in both the company and the industry [3] - Prior to this, the highest patent reward was only 500,000 KRW, which had not seen significant changes since 2017 [3] Innovation and Competitive Pressure - The increase in rewards reflects Samsung's urgent need to rebuild its technological competitiveness, as it faces severe challenges to its previously dominant positions in semiconductors, smartphones, and home appliances [3][4] - The company has seen a rising trend in patent registrations, with over 20,000 patents registered in 2023, and 9,599 patents registered in the first half of 2024 alone [4] Market Context - In the high-bandwidth memory (HBM) sector, which is critical for AI, Samsung has lost its leading position to SK Hynix, while its gap with TSMC in the foundry market continues to widen [4] - The smartphone business appears stable, but this is largely due to the use of Qualcomm's high-end application processors, which have taken over the market position previously held by Samsung [4] - In the global semiconductor patent landscape, total patent applications reached 80,892 from April 2023 to March 2024, marking a 22% year-on-year increase, with China accounting for 46,591 applications, a 44% increase [5]

Core Insights - A recent survey indicates that only 32.4% of South Korean companies believe their technological competitiveness surpasses that of Chinese companies, a significant decline from 89.6% in 2010 [1][2] - Over half of the surveyed South Korean firms feel that their technological capabilities have been matched or surpassed by Chinese firms over the past 15 years [1] - The perception of manufacturing speed has also shifted, with 42.4% of respondents believing that Chinese companies are faster, compared to 35.4% who think South Korean companies are faster [1] Industry Analysis - The survey conducted by the Korea Chamber of Commerce and Industry involved 370 domestic manufacturing companies [1] - 45.4% of the companies believe the technological gap between them and Chinese firms is minimal, while 22.2% acknowledge that Chinese companies are leading [1] - Seven out of ten surveyed companies anticipate that the rapid growth of Chinese industries will lead to a decline in South Korea's global market share and sales over the next three years [1] Price Competitiveness - A strong price competitiveness of Chinese products is highlighted, with 84.6% of South Korean companies stating that domestic products are more expensive than Chinese ones [2] - More than half (53%) of the respondents believe that Chinese products are at least 30% cheaper [2] - Specific industries such as semiconductors, batteries, steel, textiles, and apparel show significant price differences, with Chinese semiconductors priced at approximately 65% of South Korean prices and batteries at 73% [2]

Group 1 - A recent survey indicates that only 32.4% of South Korean companies believe their technological competitiveness is superior to Chinese companies, a significant decline from 89.6% in 2010 [1][2] - The survey conducted by the Korea Chamber of Commerce and Industry involved 370 domestic manufacturing firms, revealing that 45.4% perceive the technological gap as minimal, while 22.2% acknowledge that Chinese companies are ahead [1] - The perception of manufacturing speed has also shifted, with 42.4% of respondents believing that Chinese companies are faster, compared to 35.4% for South Korean firms [1] Group 2 - Price competitiveness of Chinese products remains strong, with 84.6% of surveyed South Korean companies stating that domestic products are more expensive than Chinese ones, and over half (53%) claiming that Chinese products are "at least 30% cheaper" [2] - In specific sectors, such as semiconductors, batteries, steel, textiles, and apparel, Chinese products are significantly cheaper, with semiconductor prices at approximately 65% of South Korean prices and batteries at 73% [2] - The decline in South Korean manufacturing competitiveness is attributed to China's investment policies and flexible regulations, while South Korea relies on tax incentives that disadvantage larger companies [2]

Core Viewpoint - Samsung is facing significant challenges in both its semiconductor and foundry businesses, struggling with technology leadership and market share against competitors like SK Hynix and TSMC [1][11][20]. Semiconductor Industry Challenges - Samsung has lost its long-standing leadership in the DRAM market to SK Hynix, which captured 36% of the global DRAM market share in Q1 2023, surpassing Samsung's 34% [3][5]. - The company's HBM (High Bandwidth Memory) products are facing issues with power consumption and stability, preventing them from entering the mainstream market, while SK Hynix dominates this segment with a 70% market share [3][5]. - Samsung's technology advantage in DRAM is eroding, with SK Hynix recently developing the sixth generation of DDR5 DRAM, further challenging Samsung's position [7][8]. Foundry Market Issues - Samsung's 3nm process technology has been plagued by low yield rates of only 10%-20%, leading major clients like Qualcomm and Nvidia to shift their orders to TSMC [9][20]. - The company's foundry market share has drastically decreased from 20% in 2021 to an estimated 9.3% by Q3 2024, with projected losses of 4 trillion KRW in 2024 and 5 trillion KRW in 2025 [9][20]. Strategic Shift and Financial Focus - Since around 2015, Samsung has shifted its focus towards financial performance, prioritizing shareholder returns over long-term technological investments, which has contributed to its current struggles [12][14]. - The company has significantly increased its shareholder returns, with dividends rising from 5-9% of net profits in 2010-2013 to over 30% in recent years, impacting its R&D and capital investment [15][16]. Future Directions - Samsung is attempting to refocus on its HBM business by reallocating resources and personnel from its foundry division to enhance competitiveness in memory products [20]. - The company is also initiating the development of 1nm process technology, although there are concerns about the feasibility of its existing roadmap, including the potential cancellation of the 1.4nm process due to technical challenges [21].