Samsung's $162b wipeout shows cost of failing to maintain AI edge

Just a few months ago, Samsung Electronics looked primed to benefit from the global artificial intelligence boom: profits were surging and its stock was rising towards an all-time high.

Now, South Korea's biggest company has become a stark example of how quickly fortunes can turn in an industry where the spoils go to those who maintain a tech edge.

As concerns mount that the company is losing out to smaller rival SK Hynix in AI memory and failing to gain on Taiwan Semiconductor Manufacturing Company (TSMC) in outsourced chipmaking, Samsung shares have tumbled 32 percent from 2024's peak on July 9. The company has lost US$122 billion (S$161.5 billion) in market value in that span, more than any other chipmaker worldwide.

Samsung has promised an overhaul to regain competitiveness, but international money managers, including Pictet Asset Management and Janus Henderson Investors are unconvinced a turnaround is imminent. Overseas investors have sold about US$10.7 billion worth of the company's shares on a net basis since the end of July.

"We have more than halved our position in Samsung over the last few months - it was the largest position in our strategy in July," said Mr Sat Duhra, a portfolio manager at Janus Henderson Investors in Singapore. While Mr Duhra said the shares have fallen to an attractive valuation, he has "no intention" to buy them for now.