Samsung: An Undervalued Tech Giant Eyeing TSMC’s Throne

Welcome back to The Omaha Verdict where I unpack stocks in plain English (no financial degree needed).

Today we’re looking at Samsung Electronics ($005930.KS) -- a company that quietly powers a huge chunk of the global tech industry.

Chances are, you’ve used a Samsung product this week. But what most people don’t realize is that Samsung doesn’t just make phones and TVs. It builds the chips and screens that power devices all over the world.

And right now, the stock looks… interesting.
➔ Recently started rebounding from a brutal chip downturn
➔ Trading at attractive multiples with room to run

Samsung might be the most underappreciated tech giant in the market right now. They’re massive, diversified, and quietly dominate huge parts of the global supply chain, but what makes them really interesting today isn’t just scale. It’s this:
➔ They serve both the end customer and their competitors.
➔ They run one of the strongest balance sheets in tech -- with $50B+ net cash and minimal debt.
➔ They just reclaimed the #1 semiconductor vendor spot from Intel and… NVIDIA.

The only place where they aren’t the best? Foundry services. That crown still belongs to TSMC. But Samsung is coming for it -- building new fabs in Texas and expanding in Korea, shipping cutting-edge designs, and pouring billions into R&D.

With TSMC aggressively raising prices and customers like Apple growing frustrated, this fight might be closer than it looks. Samsung is already in talks with some of them. They won’t dethrone TSMC overnight, but give it 2–3 years? If they pull it off, the upside could be huge. And with the stock having recently dipped and now rebounding, it might be one of the best times to take a closer look.

Let’s dig in.

What’s Samsung’s business model?

Samsung makes money in two ways:
➔ Selling finished products like phones, TVs, and appliances directly to consumers
➔ Supplying critical components like memory chips, processors, and display panels to other companies (including competitors)

This mix of B2C (direct sales) and B2B (selling parts to tech companies) gives Samsung multiple income streams. It also owns much of its supply chain, meaning it builds many of the parts it uses in its own products, which helps cut costs, move faster, and stay competitive.

Omaha Verdict Score™: 13 / 15

Durable Moat ➔ 3 / 3

Samsung’s edge is size, integration, and technology.

➔ #1 in memory chips -- DRAM (short-term working memory for devices) and NAND (long-term storage like SSDs)
➔ #1 in global TV unit sales
➔ Top 2 smartphone vendor
➔ Major supplier of OLED screens (used in iPhones, too)
➔ Only serious alternative to TSMC for next-gen chip production

Samsung’s vertical integration gives it speed and cost advantages -- it builds the parts and the final product. It’s rare to find a company that sells both to Apple and against Apple.

Management Quality ➔ 4 / 5

Samsung runs a tight ship. Leadership is disciplined, forward-looking, and execution-focused.

➔ Strong long-term vision -- doubling down on semiconductors, AI, and foundry
➔ Clear strategy to lead in memory, catch up in chip manufacturing, and embed AI into all products
➔ Well-run across divisions -- despite the size, each segment is tightly managed
➔ Record spending on R&D (~₩35T / $25B in 2024)
➔ Building new chip factories in the U.S. and expanding in Korea
➔ Recently cleared of governance overhang -- Chairman Jay Y. Lee was found not guilty in a major case, removing legal distractions

The team isn’t perfect. Past controversies and the group structure still leave room for concern. But operationally, they’ve delivered through downturns and consistently invest ahead of major tech shifts.

Business Fundamentals ➔ 5 / 5

Even after a tough 2023, the rebound is strong.

➔ 2024 Revenue: ₩300.9T ($221B)
➔ Net Income: ₩33.6T ($24.7B)
➔ Free Cash Flow: ₩19.2T (~$14.1B), up 217%
➔ Operating Margin: 10.88%
➔ Net Margin: 11.17%
➔ Net cash: ₩70T (around $51B)
➔ Net Debt: Negative; they have more cash than debt

This is a cash-printing machine. 2023 earnings were hit hard by falling chip prices, but 2024 saw a strong recovery, especially in semiconductors. Memory chip sales surged again, and profits bounced back. They have an ultra-strong balance sheet thanks to conservative financial management.

Valuation ➔ 1 / 2

Valuation looks attractive, especially after the recent drop.

➔ Price-to-Earnings (P/E): ~10.75x
➔ EV/EBITDA: ~4.07x

The stock sold off sharply in 2023 as profits collapsed during the chip downturn. But that cycle appears to have bottomed. With demand for AI infrastructure rising fast, Samsung’s chip business is rebounding and that gives this valuation more upside than downside.

Bull Thesis

➔ AI growth = more servers = more high-end memory = Samsung wins
➔ Already shipping advanced memory chips (HBM3E) for AI
➔ Expanding next-gen chip production (2nm) to compete with TSMC
➔ Strong, stable phone and appliance sales cushion the cycles
➔ $50B+ cash pile gives them flexibility no matter what happens

If AI demand keeps accelerating, Samsung could become even more critical to the global tech supply chain. Especially if it narrows the gap in logic chips.

⚠️ Risks to Watch

➔ Foundry competition -- TSMC still leads in cutting-edge chipmaking
➔ Geopolitics -- U.S.–China tensions could disrupt Samsung’s supply chain
➔ Phone & TV markets -- Mature, with price pressure from Chinese brands
➔ Chip cycles -- Memory pricing can drop fast and take profits with it
➔ Big bets -- New chip factories are expensive and take time to pay off

Bottom Line

Samsung is a behind-the-scenes powerhouse, and right now, it’s showing signs of momentum just as investors have tuned out.

It’s not a get-rich-quick stock. But it is one of the few companies that can serve both the AI arms race and global consumer tech, all while running one of the strongest balance sheets in the industry.

The valuation looks fair. The upside, if they execute, looks real.

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Financial Disclaimer

Disclaimer: This newsletter is for informational purposes only and is not financial advice. I’m not a financial advisor, and nothing here should be taken as a recommendation to buy or sell any stock. Always do your own research and consult with a professional before making any investment decisions.