The South Korean electronics giant Samsung has suffered a £122 billion fall in market cap, a collapse that has been characterised as a ‘wipeout.’ It comes amid trouble for the firm with regulators, unions, and declining profits. There are also questions over whether Samsung has been too slow to adopt AI and suggestions it is now paying the price for lagging behind. So, what is behind Samsung’s difficulties, and what does it mean for investors?

Samsung is in a crisis

Samsung shares have tumbled more than $100 billion since July after the company admitted it was ‘in crisis.’ At the beginning of October, a senior figure at the firm said it was facing real difficulties, particularly in chipmaking. Commenting, Young Hyu Jun, vice president of Samsung’s device solutions division said:

“A lot of people are talking about Samsung’s crisis, and the full responsibility lies with us, those who are leading the business.”

The remarks came after Samsung missed analyst expectations in its Q3 earnings report by around a billion dollars and announced that 147,000 staff would have to be axed from the company. Reuters reported that the redundancies would impact the Americas, Europe, Asia, and Africa. A source close to the decision told the outlet that it would result in some departments losing as much as 30 percent of their workforce.

Simultaneously Samsung is battling the demands of labour unions, particularly in India where 1,500 workers recently walked out of a major appliance factory for over a month in a dispute over pay and conditions. Earlier this year the electronics giant was also facing strike action in Korea, where it employs more than 100,000 workers, after unions rejected a proposed 5.1 per cent pay rise. The various industrial actions are reported to have caused disruption to the firm’s supply chains.

Samsung slow off the mark with AI

A major issue for Samsung has been its failure to capitalise on AI. Bloomberg described the company as a ‘cautionary tale’ for failing to keep pace with new technologies. In its Briefing Asia newsletter, they said:

“If the pace of technological advancement has increased exponentially in the past century, so has the speed at which fortunes can be made or lost. As the tech earnings season kicks into gear and lays bare the results of various AI strategies, Samsung Electronics provides a cautionary tale…

“[C]oncerns are mounting that the company is losing out to smaller rival SK Hynix in AI memory and failing to gain on Taiwan Semiconductor Manufacturing in outsourced chipmaking.”

While rival firms like Nvidia are charging ahead on AI chips, Samsung’s progress on AI continues to lag and its AI products appear to be flawed. Samsung’s ‘AI laptop’, the Galaxy Book 4 Edge, entered the market over the summer – but to the bemusement of some customers, it was incompatible with popular software and video games.

As the Wall Street Journal reported:

“Samsung Electronics 005930 0.49%increase; green up pointing triangle said its latest laptop, which uses a Microsoft operating system and includes artificial-intelligence features, has encountered problems running some software programs including popular games.

“The issues offer an early hint of the challenges some tech companies may face as they introduce new AI-powered computers and smartphones while seeking to maintain compatibility with existing software.”

Is Samsung a good investment?

When a company is suffering a downturn, investors often see a long-term opportunity. And in the case of Samsung if it does present an opportunity analysts say it certainly will not be in the near term. Wong Kok Hoong at Maybank said the gap between AI winners and losers “won’t be narrowed any time soon,”.

Although Samsung shares enjoyed a slight bounce back last week, they show few signs of a quick recovery. That’s partly because Samsung’s major problems aren’t its labour disputes or product glitches – but rather its distant position in the AI race. Catching up isn’t an overnight process, and will require enormous investment, research development and time.

In September Bank of America Securities downgraded its position on Samsung from buy to neutral, and revised its price target downward. As per Investing.com: “BofA Securities also anticipates an operating loss for Samsung’s foundry business in the second half of 2025, citing underutilized capacity and a lack of new orders for NVIDIA graphics processing units (GPUs)”.

Last month JP Research said Samsung’s semiconductor business ‘was not in great shape’ and warned investors ‘about underwriting a turnaround despite the optically cheap stock’ and added ‘betting on Samsung turning things around isn’t straightforward.’

And as The Register reports: “Competitors have secured strong positions in key markets. However, the semiconductor industry is dynamic, and with the right strategies and flawless execution, Samsung can work toward reclaiming its leadership role.

“Failure to effectively address its current shortcomings risks relegating Samsung to a secondary position in a market it once dominated.”

What next for Samsung?

Samsung faces a tough road ahead in reclaiming its competitive edge, particularly in the fast-evolving AI sector. Falling behind rivals like Nvidia and Taiwan Semiconductor Manufacturing has put the company in a vulnerable position that cannot be quickly or easily remedied.

The hurdles it faces—from declining profits and labour disputes to underwhelming product launches—underscore a deeper challenge: Samsung’s need to rebuild its innovation pipeline and significantly expand its AI capabilities. While strategic investments in research and development are essential, the technological gap is substantial, and catching up with industry leaders will demand more than just financial resources.

Samsung must address both its operational weaknesses and strategic direction to regain investor confidence and reestablish itself as a top player in tech. Without swift and effective changes, Samsung risks losing its once-dominant position in the market and becoming an afterthought in the AI revolution.