But performance has been plummeting since early in the second half. Major Korean and foreign securities firms are downgrading their forecasts for the third quarter. The sluggish performance is due in large part to the global economic slowdown caused by the U.S. subprime mortgage crisis. As a result, demand for key products, such as semiconductors, mobile phones and LCD displays, has not been boosted by the high-demand season.

But experts say the poor performance cannot be blamed on the outside environment alone. They say Samsung is losing its edge in the IT industry. For example, in mobile phones, Samsung has had no big hits like the Lee Kun-hee and Blueblack phones, which sold more than 10 million units. It is also lagging behind rivals in the development of new products such as a touch-screen phones. As a result, Samsung fell behind LG Electronics for the first time by recording only a 12 percent operating margin in the second quarter.

In the second half of this year, Samsung’s operating profit in the U.S., its key strategic market, plummeted to the 7 percent range. Lee Seung-hyuk, an analyst at Woori Investment and Securities, said, "I feel that Samsung Electronics is disoriented in its business strategy for mobile phones."

Despite a recent reshuffle of top managers, Samsung has also failed to release new robust products in the semiconductor sector. In the early 2000s, when the IT bubble burst, the global semiconductor industry experienced oversupply and a fall in prices. A similar phenomenon is occurring now. In the past, Samsung concentrated its investment on Flash memory, which is used as a storage device for a variety of IT gadgets such as digital cameras, creating a new market and recording astronomical profits.

But the conglomerate has failed to find another such breakthrough. Plus it is performing poorly in sales of LCD displays amid the worldwide economic slowdown.

The problem is that Samsung seems to be complacent in its current status as a giant conglomerate but is ageing rapidly, losing its earlier challenging spirit to make bold investments and take risks.

Despite its announcement of a plan to develop the bioengineering, energy and health businesses as new growth engines, Samsung has failed to produce tangible results. Many people worry about a leadership vacuum in the wake of Lee Kun-hee's resignation as chairman. They say the current lineup of Samsung top executives is failing to display the strong leadership of Lee and the now-defunct strategic planning office.

A senior business leader said, "Most of Samsung's key products are characteristically short-lived and require huge amounts of R&D costs. Samsung needs to make bolder and faster decisions. If it fails to meet these needs, Samsung will suffer bigger loss than others -- and more quickly."

(englishnews@chosun.com )