Visitors experience Samsung Electronics' Gear VR during the Korea Electronics Grand Fair at an exhibition hall in Seoul in October, 2016. Photo: AFP/Jung Yeon-je

Anyone viewing the world through the prism of their iPhone screen could be forgiven for thinking they’ve woken up in some kind of alternate reality. After all, Apple Inc’s perennial rival, Samsung Electronics Co, has endured months of public humiliation over the catastrophic failure of batteries in its now-recalled Note 7 smartphone.

Yet it is Samsung shares that on Wednesday hit a record high in Seoul, bringing gains for the year so far to 39%. Meanwhile, Investors in Apple, whose long-held lead at t he innovative edge of the mobile revolution turned an also-ran maker of desktop computers into the world’s most valuable listed company, have seen the value of their holdings drop for four consecutive days. Apple shares are now almost a fifth lower than when the share price peaked in April last year.

It’s not that Apple is getting slovenly or cutting corners in the latest iterations of its mobile phones. Nor does the US$600 billion behemoth seem to suffer from a compulsion to leave more money on the table for suppliers and assemblers — Apple’s gross margin hovers around the 40% mark, a percentage point or two above Samsung’s. Investors value both companies at around 13 times their earnings.

No doubt a major force behind Samsung’s 4% jump on Wednesday was the news that it has hired advisers to carry out a six-month review on how to improve corporate governance. The study will look at splitting up the flagship unit into a holding company and an operating arm.

Samsung dressed the move up as its response to calls from US activist investment fund Elliott Management in October to improve shareholder value, transparency and accountability.

Elliott’s proposal calls for Samsung to set up a holding company that would own about 20% of the operating arm. The plan also calls for Samsung C& T Corp, which owns more than 4% of Samsung Electronics, to be folded into the holding company. Samsung said the review did not include C& T.

Still, the company tossed a bone to disappointed investors with a pledge to add at least one outside director to the board — topped up with bundles of cash. Half of the free cash flow will go back to shareholders as dividends and buybacks over the next two years (about US$8 billion at today’s exchange rates, but less than a third what Elliott had called for.)

While Samsung’s concessions turn out to be less than they were first made to appear, they represent something of a sea change in South Korea’s treatment of foreign investors. That may be more a case of the controlling Lee family bending before the winds of public opinion: the chaebol model is increasingly under fire for hindering corporate governance and holding back competition.

“Korea is monopolized by chaebol, which produce over 70% of [daily goods],’’ four-term opposition lawmaker Park Young-sun told the Korea Times on Wednesday, adding that reforming the country’s business environment was a prerequisite for building an advanced society. “Small and medium-sized firms are marginalized. It’s like we’re stuck in a bottleneck.”

The ongoing political scandal that has engulfed President Park Geun-hye hasn’t helped Korea Inc’s cause. Prosecutors raided Samsung’s offices last week after it was among chaebol implicated in an influence-peddling case involving a close associate of Park’s.

Jay Y. Lee, the only son of Samsung Electronics chairman Lee Kun-hee and the company’s vice chairman. Photo: Reuters/Cho Seong-joon

Many observers have said they see Samsung’s move as primarily a tactic to consolidate the Lee family’s control under heir-apparent Jay Y. “The founding family will be able to secure stable management control over the group, which is the final goal of this whole process,” Park Ju Gun, the president of Seoul-based corporate watchdog CEOScore, told Bloomberg. “The founding family will be able to secure stable management control over the group, which is the final goal of this whole process.”

So if the buzz surrounding the restructuring talk is overstated, what explains the rising fortunes of the smartphone maker without a new smartphone to sell?

“Samsung’s peer-beating margins reflect its focus on premium memory chips and display panels. It leads in the adoption of advanced manufacturing processes, while its System LSI unit competes with foundry companies on non-memory chips,” Bloomberg Intelligence analyst Anthea Lai wrote in a recent report. Samsung has also agreed to pay US$8 billion in cash for auto-electronics supplier Harman International Industries.

Samsung expects capital expenditure to be about US$23 billion in 2016, a record high for the company and about fours times the industry average of a group of its peers, according to Bloomberg. Investment into the semiconductor and display businesses are forecast to more than double from a year before.

The Korean conglomerate is sticking to a tried and trusted tactic. Samsung destroyed the Japanese chipmakers in the DRAM sector before pioneering flat-screen TVs and crippling Sony and Sharp along the way. Nokkia’s handset dominance soon followed.

Samsung sprawls across sectors in which it can master the industrial process and overwhelm rivals by flooding the zone with money. There’s more to life than a fancy phone, it would seem.