Samsung Electronics AI Strategy

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Business Consulting Center (BCC) Korea
Samsung Electronics AI Strategy
May 04, 2018 Sung-Bin Yoon Art Choi
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Record-high operating profit in Q1, 2018
Samsung Electronics recorded a 15.6 Trillion Won
Operating Profit in the first quarter which is a
record high for any three-month period
Samsung Electronics Quarterly Operating Profit
Unit Trillion Won
Source) Samsung Electronics
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However, highly dependent on semiconductor segment
Device solution segment contributes 74 of total
operating profit. Especially, chip business saw
its operating profit reach 11.55 trillion won
(about 73)
Samsung Electronics Sales Operating profit by
segments (2018. Q1)
Unit Trillion Won
Source) Samsung Electronics
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How long chips super-cycle will last?
Semiconductors super-cycle is expected to last
until 2018 or the first half of 2019
Semiconductor market is boom in Super-Cycle
Limits to Growth
NAND Flash
D RAM
market size

• Vulnerable to business cycle
• Demand growth may fall after 2019
• Major players capacity investments
• China production expansion

Source) WSTS(World Semiconductor Trade
Statistics), Bank of Korea
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Whats next? Samsung is pushing for AI first
strategy
AI(Artificial Intelligence) First Strategy
AI will be adopted into Samsungs all the
products and services by 2020
Semiconductor
Consumer Electronics
IT Mobile
Automotive Electronics
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Samsungs AI Strategy RD
While integrating AI RD functions into newly
established AI Center, Samsung is expanding
oversea networks in all over the world
Samsung Research America
Subsidiaries in Silicon Valley AI talent recruitment, RD on AI technology
Montreal University AI Research Institute
Joint research with Prof. Yoshu Benjio's team
AI Center (Seoul)

• Head of AI First Strategy
• Integrated Management
• of AI labs worldwide

Bengaluru RD Center
Development of customized AI services for emerging markets such as India
Paris AI Research Institute (expected)
Additional research institutes expected in UK, Russia, Canada
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Samsung AI strategy MA, Investments
Samsung has been aggressive in investment on AI
startups Since 2017, it recorded about 17 cases
of MA or investments
Samsungs AI startup MA and Investment
Company name Country Area of technology and service
Fluenty Korea Interactive AI chatbot creation platform
VIV Labs Inc. USA Viv is an AI platform that enables developers to create an intelligent, conversational interface to anything
Innotics Greece Automatically convert text to speech
Kngine Egypt AI based search service
Mapillary Sweden AI-based image and map production (for autonomous driving)
Alllegro Israel Deep Learning
AImotive Hungary Autonomous Driving
AudioBurst Israel AI speech recognition platform.
Unbabel USA AI based language translation
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Samsung AI strategy - Convergence service
innovation
Convergence service innovation process
Service product innovation
New service concept
Convergence technology
Business model innovation
New revenue model
Enabler of service innovation
Service process innovation
New service process
Source) Sung-Bin Yoon (2017), Convergence Service
Innovation Smart car, Smart healthcare, Smart
home service, IWELL Contents .
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AI Convergence Case study (1) Smart phone
Composition of AI Convergence Service Innovation
Process Key features
Convergence technology AI Bixby voice command and Deep learning capability (telecommunication information camera Translation Smart Search) IoT integration with all compatible devices
Service product innovation Smart AI Integrated solutions for phone customer 1) Safety and health 2) Information, Scan Function 3) Entertainment, travel 4) Communication, Camera
Service process innovation AI complex cooperation, deep learning process (Learns users daily routine, smart speech and Voice Command Bixby, Connectivity to SmartThings app for all compatible devices to be integrated for easy IoT use)
Business model innovation Revenue model - integrated into phone, purchase per phone - Samsung Account Login
Samsung Galaxy 9, 9
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AI Convergence Case study (2) Smart TV
Composition of AI Convergence Service Innovation
Process Key features
Convergence technology AI Technology Deep learning QLED (Quantum Dots Display) Bixby Voice Command IoT platform with compatible devices (automatically upscales low-resolution images into 8k picture quality, sound and settings changed by users content)
Service product innovation Integrated solutions for Television viewers 1) Auto 8k resolution for all images 2) Information and detail viewership contents 3) Entertainment 4) Communication through Bixby and learns through users content
Service process innovation Complex Deep Learning process with Bixby voice command and Smart Resolution upgrade to any sound and picture quality Extended interface compatibility with TV owners with Samsung IoT products
Business model innovation New revenue models - Integrated within the TV on purchase - Samsung Account Login
Samsung 8k QLED TV
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AI Convergence Case study (3) Smart Speaker
Composition of AI Convergence Service Innovation
Process Key features
Convergence technology Bixby voice command (AI assistant that will be applied to all appliances) Media Casting Support SmartView App compatible
Service product innovation Integrated solutions for Samsung customer 1) User command support 2) Information 3) Entertainment, Media 4) Communication Bixby
Service process innovation Complex Deep Learning and voice command process (Bixby integrated, user command friendly, actions by users request, built in compatibility with other compatible devices, IoT Platform) Extended interface with speaker owners
Business model innovation Revenue model - Integration with purchase of Speaker - Samsung account login
Samsung AI speaker
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AI Convergence Case study (4) Smart Air
Conditioner
Composition of AI Convergence Service Innovation
Process Key features
Convergence technology Deep Learning AI Process (capable of learning users preferable temperature, controls itself to climate changes) Bixby voice command IoT platform with compatible devices
Service product innovation Integrated solutions for Air Conditioner customers 1) Safety, climate control 2) Information 3) Communication, Bixby operated
Service process innovation Deep Learning process (Bixby voice command, learns and analyzes users preferences, autonomous) Extended interface with Air Conditioner owners (connectivity to compatible IoT platform devices)
Business model innovation Revenue models - Pay on Purchase of Air Conditioner - Samsung account login
Samsung Wind-Free Air Conditioner
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Key success factors are consumer adoption
Convergence Adoption Model
Design
Source) Yoon, S. B., Cho, E. (2016).
Convergence adoption model (CAM) in the context
of a smart car service. Computers in Human
Behavior, 60, 500-507.
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Consumer adoption factors
Factor Role and impact on user perception
Perceived Usefulness, Ease of Use, Enjoyment A user is more likely to adopt a new technology when he/she believes that using a particular technology would enhance the user's job performance (Perceived Usefulness PU) and also when using it would be free of effort (Perceived Ease of Use PEU) Perceived enjoyment(PE) is another factor for hedonic aspect of user evaluation of technology
Compatibility The compatibility of user experience with existing technologies is indeed a critical factor affecting consumer evaluations of a convergence service There exists a spill-over effect from past experiences to compatible technologies not only in terms of cognitive (i.e., fit evaluation of needs and values) but also emotional experiences
Task-Technology Fit Task-technology fit (TTF) is defined as "the degree to which a technology assists an individual in performing his or her portfolio of tasks TTF can directly influences the adoption intention and can be also a significant factor mediating the effect of perceived usefulness and enjoyment on the adoption intention
Design Visual attractiveness of the interface design can positively influences the evaluation of the key factors such as user's perception of compatibility, perceived enjoyment, and directly adoption intention
Source) Yoon, S. B., Cho, E. (2016).
Convergence adoption model (CAM) in the context
of a smart car service. Computers in Human
Behavior, 60, 500-507.
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Contact
Business Consulting Center at QYR U.S.A.
Office Mark Liu Tel[phone] E-mail
liujunjie_at_qyresearch.com China Office Simon
Lee(Zhang Dong) Tel [phone] E-mail
zhangdong_at_qyresearch.com South Korea
Office Sung-Bin Yoon, Ph. DTel
82-10-7551-1278 E-mail yoon_at_innoresearch.co.kr
/yoon_at_qyresearch.com Japan office Tang
Xin Tel[phone] E-mail tangxin_at_qyresearch.
com