Samsung struggles against Apple: affects entire South Korean economy

October 1, 2014

Samsung Electronics Co. shares reach a two-year low

People stand in front of a Samsung Electronics Co's showroom in Seoul, South Korea, Thursday, July 31, 2014. Samsung Electronics Co. reported a bigger-than-expected fall in second quarter profit on Thursday and said it was uncertain if earnings from its handset business would improve in the current quarter.(AP Photo/Ahn Young-joon)

People stand in front of a Samsung Electronics Co’s showroom in Seoul, South Korea. (AP)

Samsung Electronics Co. shares have reached a two-year low as of Tuesday morning and the repercussions are rippling through the rest of the South Korean economy.

The Korean Composite Stock Price Index (KOSPI) is so dependent on the tech giant that since Samsung’s stocks started dipping a few weeks ago, the value of KOSPI reached a two-month low just two days ago.

Just as Apple shares were able to sway the entire U.S. market in 2012 with a $500 billion value, Samsung’s $180 billion overall market share value is doing the same. Hyundai Motors comes in a not-so-close second at $42 billion, which gives a sense of why Samsung’s performance affects the broader South Korean market.

A lot of this pressure is coming from the recent battle between Samsung’s Galaxy Note 4 and Apple’s iPhone 6 Plus.

Despite media reports of pre-order success from both sides, the painful truth is that both Chinese competitors with cheaper alternatives and Apple’s new line are causing significant losses in Samsung’s smartphone market share.