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Is world-beating Samsung undervalued?

SEOUL – The sum of US$461 billion is hardly small change, but when you consider it is the market capitalization of the biggest company in one of the hottest sectors in the global economy, something looks amiss.

Is Samsung Electronics undervalued? Its nearest rival in chip-making, Taiwan-based TSMC, is worth $602.33 billion. Its nearest rival in smartphones, US super brand Apple, has a whopping $2.4 trillion market cap.

Granted, Apple earned $274.5 billion in net income in 2020 – a tad more than Samsung’s $212.43 billion, but hardly reflective of the colossal gap between the two company’s valuations. Samsung’s income in 2020 far outpaced TSMC’s 2020 revenue of $47.78 billion.

The gap is explained by a complex range of factors. Some say the company is too diversified to excite investors who want focus, while others argue its governance issues generate a discount.