[Inside Chodong] How Much Do You Really Know Before Investing in Semiconductors?

From home appliances to smartphones, displays, and semiconductors, Samsung Electronics has expanded into such a vast range of business areas that it drives South Korea's export economy. However, the company often frustrates investors because there is insufficient business-related information available to them. This is the story of Samsung Electronics, a company that every stock investor has likely held in their portfolio at least once.

Samsung Electronics is undoubtedly Korea's representative company and a national stock that everyone?from beginners in stock investing known as 'Joorini (stock + child)' to seasoned value investors who foresee future industries and potential?has held in their stock accounts at least once. Its stock price once soared beyond 2.5 million KRW per share, earning it the nickname 'Emperor Stock,' but after a stock split in 2018, the price settled around 50,000 KRW per share, instantly transforming it into a 'People's Stock.'

As of the first half of this year, Samsung Electronics has approximately 5.66 million small shareholders. To hold a shareholders' meeting gathering all these shareholders from across the country, renting a convention center is necessary.

Most individual investors decide to invest by looking at the semiconductor market, which accounts for 60-70% of Samsung Electronics' total operating profit. Although Samsung Electronics is Korea's leading home appliance company, the semiconductor segment plays such a crucial and significant role as a cash cow that Samsung Electronics also holds the title of Korea's top semiconductor leader.

During the golden era when the semiconductor industry was thriving, Samsung Electronics achieved record-high earnings and its stock price rose, even liberal arts students studied semiconductors. According to FnGuide, a financial information provider, over the past three years, more than 7,000 securities reports have been published under the semiconductor category?more than any other industry group.

In semiconductor-passionate South Korea, how close can investors get to Samsung Electronics' semiconductor business? Samsung Electronics discloses data during quarterly earnings announcements that allow investors to predict how well the semiconductor business performed over the past three months and how much profit it can generate in the future. However, the information provided is very limited.

Samsung Electronics is an integrated device manufacturer (IDM). It is the undisputed global No. 1 in the memory semiconductor business. It is also the world's No. 2 company competing with Taiwan's TSMC, the industry leader, in the foundry (semiconductor contract manufacturing) sector. Nevertheless, Samsung Electronics' earnings reports only disclose the proportion of memory semiconductors in total semiconductor sales and operating profit. There are no numerical data to understand market and business trends, such as inventory levels, production and shipment volumes, or prices of key products.

In the non-memory segment, including foundry, Samsung does not reveal sales status by process or sales proportions by platforms such as HPC, smartphones, or automobiles. This contrasts with industry leader TSMC. In fact, Samsung Electronics fails to provide core data that would allow investors to properly assess how well the company is performing. Many global semiconductor companies, including Micron, disclose estimated sales and operating profits for the upcoming quarter or year along with their earnings announcements, but it is difficult to expect such disclosures from Samsung Electronics.

Investors must rely on semiconductor price and shipment status and forecasts estimated and published by overseas market research firms to judge whether Samsung Electronics will perform well in the semiconductor business going forward. Although Korea is a semiconductor powerhouse, most of these market research firms are Taiwanese or American companies, so they may not accurately reflect the circumstances of Korean companies.

Of course, semiconductors are a core industry driving Korea's economy and exports, so confidentiality is necessary. Revealing which segments the company is focusing on for performance could disclose growth secrets to competitors, and exposing vulnerabilities could threaten company management. However, competition should be based on technological prowess, not on keeping many secrets. We hope the door to Samsung Electronics' secrets will open so that investors passionate about the semiconductor industry can access more transparent and detailed information.

This content was produced with the assistance of AI translation services.