THE STORY OF SAMSUNG
SMARTPHONES IN SOUTH
KOREA
ECO162
BA1192A
Our Team
Mohamad Ammar BIn
Mohd Anuar
2025204416
1.0 INTRODUCTION
COUNTRY & LOCATION
Prominent country located in East Asia
Features a mountainous landscape with limited natural resources
Operates under a democratic presidential system
Home to major cities such as Seoul (capital) and Busan
POPULATION
Estimated around 51 million, making it one of the most densely populated nations globally
Facing unique demographic challenges : slower population growth and an aging society
Most people reside in major urban areas like the Seoul Capital Area
INTRODUCTION
ECONOMIC BACKGROUND
South Korea transitioned from a war torn nation in the 1950s to one of the world's most
advanced, high-tech industrialized economies a phenomenon known as the "Miracle on the Han
River.
The country operates a highly developed mixed economy, where market forces drive innovation,
while strategic government regulation ensures national stability and infrastructure growth.
South Korea’s economic foundation relies heavily on international trade and innovation,
making it a global leader in advanced technology, electronics, and manufacturing.
While boasting a population of around 51 million and immense tech power, the economy
continuously adapts to modern challenges such as an aging demographic and shifting export
dynamics.
REPORT PURPOSES & SCOPES
The purpose of this report is to describe basic microeconomic concepts and issues, and to
apply microeconomics knowledge and reasoning to explain consumer, producer, and market
behavior in relation to contemporary economic issues and policies. Specifically, this report
applies these these theories to analyze how South Korea’s economic system coordinates
free-market forces with goverment intervention. Furthermore, this report aims to evaluate
the market dynamics, demand-supply factors, and pricing strategies of Samsung
smartphones within both the domestic and global electronic sectors. Therefore, this report is
prepared to fulfill the academic requirements for the ECO162 course as directed by the
university.
2.0 TYPE OF ECONOMIC SYSTEM .
The mixed economic system
Dual Sectors: Public and private entities operate side-byside to supply both private
and public goods.
Income Regulation: Progressive tax structures are used to reduce systemic
inequality.
Market Stabilization: Monetary and fiscal intervention protects consumers from
monopolies and inflation.
Examples: Actively implemented in countries like Malaysia and France.
3.0 DEMAND AND SUPPLY ANALYSIS
3.1 PRODUCT CHOSEN: SAMSUNG SMARTPHONES
Originally founded as a small trading Secured vital technology transfers and
company dealing in basic consumer products partnerships with Japanese firms to expand
in the mid-1900s. initial supply capacity.
Strategic shift to manufacturing consumer Invested heavily in advanced, state of the art
electronics, semiconductors, and memory campus facilities across South Korea (Suwon,
chips in the 1980s and 1990s. Seoul) for product testing.
Expanded global market share rapidly, driven Continuously innovates and scales up supply
by rising consumer demand for advanced chains to remain a global leader in high-tech
digital technologies. manufacturing.
Currently holds a massive share of South Effectively influences the modern didgital
Korea’s total exports and dominates the world as one of the largest producers of
global smartphones industry. microchip and display components.
3.2 FACTORS AFFECTING DEMAND OF SAMSUNG
Factors Affecting Electronics Demand in South Korea
1. Innovation-Led R&D (Samsung Lead)
Domestic giants proactively stimulate demand by launching premium next-gen form
factors (e.g., foldable OLEDs, 6G).
Device acquisition is heavily driven by perceived social status and performance upgrades.
2. Compressed Product & Tech Lifecycles
Frequent upgrade patterns are anchored by highly anticipated annual hardware releases.
Systemic network infrastructure shifts (4G to 5G) serve as catalysts forcing nationwide
device replacement.
3. Upstream Semiconductor Supply Control
Sovereign leadership in global DRAM and NAND flash memory production protects local
supply.
Global market pricing fluctuations and supply chain resilience directly dictate domestic
consumer pricing and availability.
3.3 FACTORS AFFECTING SUPPLY FOR SAMSUNG
Factors Affecting Electronics Supply in South Korea
1. Technological Disruption & Product Innovation
Rapid shifts toward next-generation hardware (AI-integrated appliances, foldable displays, quantum
computing) force massive R&D reallocations.
Supply availability is highly dependent on how quickly manufacturing lines can adapt to these complex,
innovative product cycles.
2. Input Costs & Supply Chain Logistics
Production is material-intensive, relying heavily on steady access to semiconductors, displays, and rare
earth elements.
Supply is constrained by rising component costs, bottlenecks, and international trade friction, while
optimized regional logistics bolster capacity.
3. Government Policy & Trade Agreements
State-level initiatives, including tax subsidies and domestic chip manufacturing incentives, actively boost
national production capacity.
Favorable export agreements directly expand the global reach and competitive supply advantage of local
giants like Samsung.
THE MARKET EQUILIBRIUM FOR SAMSUNG SMARTPHONES
Market equilibrium occurs when quantity demanded equals
quantity supplied.
At KRW 1,400,000, both quantity demanded and quantity supplied
are 1,050 thousand units.
At KRW 800,000, demand (1,800 thousand units) is higher than
supply (900 thousand units), causing a shortage.
As the price increases, quantity demanded decreases while quantity
supplied increases until the market reaches equilibrium.
CHANGES IN THE MARKET EQUILIBRIUM FOR SAMSUNG SMARTPHONES
4. 0 ELASTICITIES OF DEMAND
Inelastic demand
Ed = Percentage change in quantity demanded of Samsung (Qd)
Percentage change in price of Samsung (P) because the elasticity is
= Qd (2) - Qd (1) P (2) - P (1) more than zero but less
Qd (1) P (1)
than 1( 0 < d < 1 )
= 1400 - 1800 ÷ 1100000 - 800000
1800 800000
= -0.22 ÷ 0.375
= -0.59 = 0.59
4. 0 ELASTICITIES OF SUPPLY
Es = Percentage change in quantity supplied of Samsung (Qd)
Inelastic supply
Percentage change in price of Samsung (P) because the elasticity is
= Qs (2) - Qs (1) P (2) - P (1) more than zero but less
÷
Qs (1) P (1)
than 1( 0 < s < 1 )
= 1100 - 900 ÷ 1100000 - 800000
900 800000
= 0.22 ÷ 0.375
= 0.59
FACTORS INFLUENCING ELASTICITY IN DEMAND
Consumer’s habit level of income
Due to extreme brand loyalty in South South Korea’s high level of income means that purchasing
Korea, Samsung has become a daily tech products does not heavily drain the average
necessity for consumers. This strong habit household budget. Even during inflaction, consumers
makes their demand highly inelastic, prefer to ‘buy down’ within the Samsung ecosystem
meaning that even substantial price rather than buying fewer devices.
increases will only cause a minor drop in
consumption.
FACTORS INFLUENCING ELASTICITY IN SUPPLY
Samsung’s supply is inelastic. High-tech production cannot be
sped up instantly because building new assembly lines takes
years. If market prices spike in 2026, Samsung’s decision to
increase production capacity will not result in additional supply
on the market until 2028 or 2029.
CONSUMER BEHAVIOUR
South Korean consumers aim to maximise satisfaction and value.
They consider product quality, innovation, brand reputation, and price before
purchasing.
Samsung is preferred for its reliability, advanced technology, and connected
ecosystem.
During inflation, consumers may choose affordable Samsung models instead of the
latest flagship phones.
Consumers also compared Samsung with competitors such as Apple and Xiaomi
before making a purchase.
THEORY OF DISTRIBUTION IN SOUTH KOREA
Samsung is on of South Korea’s largest technology companies and the world’s leading
smartphone manufactures. The success of the Samsung Galaxy series has created
thousands of jobs in engineering, software development, manufacturing, marketing, and
customer service. As global demand for Samsung Galaxy smartphones coutinues to
grow, Samsung requires more skilled employees to design innovative products, improve
production, and expand into international markets. This increased demand for labour
leads to higher wages, especially for highly skilled professionals.
FACTORS INFLUENCING WAGE DIFFERENCES
Many factors influence wage differences in Samsung, one of South Korea's largest
technology companies. Employees with higher skills, better education, and more
experience usually receive higher wages. Workers who are more productive and help
develop new technologies also earn better salaries. In addition, the demand for
skilled workers, such as engineers and AI specialists, increases wages because
Samsung needs their expertise. The supply of labour also affects wages. When there
are fewer qualified workers available, Samsung must offer higher pay to attract and
keep talented employees. These factors explain why some workers earn higher
wages than others.
CONCLUSION
Successful Economic Framework Microeconomic Alignment
South Korea’s high income mixed economy The analysis of price elasticity , consumer
provides a resilient foundation for behavior, and resource allocation
technological innovation. effectively demonstrates how South Korea
and Samsung maintain resource efficiency
Samsung’s Strategic Impact in the global smartphone market
By balancing dynamic demand and supply,
Samsung successfully drives a major portion of
the nation’s exports and economic growth
Adaptability in Global Tech
Despite economic challenges like aging
population or intense revarly, continuous
investment in R&D and engineering talent
ensures long-term market dominance