IT HAS been a remarkable year for Samsung Electronics. Last weekend the company was one of the stars at the giant consumer-electronics show in Las Vegas where it unveiled a glittering array of new products. Among them was a notable first: a mobile phone that uses voice-recognition technology to convert speech into text messages offering respite to people who find typing messages on their mobiles tiny keyboard frustrating. Another Samsung model automatically scans business cards and inserts the details into the users address book.Just as impressive is the fact that this week Samsung will announce record-breaking annual results not just as South Koreas most profitable but also as its most visible company. Samsung has edged closer to its Japanese rival Sony as the worlds leading consumer-electronics firm. It is already the largest producer of many digital devices. It is poised to overtake Americas Motorola as the worlds second-biggest maker of mobile phones.Yet even as Samsung was closing the books on a triumphant 2004 its future was looking less certain. The Korean won soared to a seven-year high against the dollar reducing the value of much of its overseas earnings. While electronic gadgets such as digital cameras mobile phones and flat-screen televisions remain as popular as ever prices are falling. That cuts into Samsungs profit margins. Worst of all the companys memory-chip business by far its most profitable operation in 2004 is facing harder times as the notoriously cyclical semiconductor industry enters yet another downturn.For Samsungs bosses this may seem dishearteningly familiar. In 1995 the company also smashed earnings records only to see chip prices tumble and currencies head into turmoil. By the dark days of the 1997 Asian economic crisis Samsung was deep in debt and heading towards bankruptcy. But this time things should be different. The company has now been transformed in so many ways maintains Yun Jong-yong a company veteran who took over as chief executive in 1996 that it can not only weather the coming storm but will sail on to even greater things.Mr Yun has to plot an ambitious course. The companys strategy is based on providing leading-edge stylish products that can be sold for a premium. quotIf we were to compete only on pricequot admits one executive quotthe Chinese would slaughter us.quotSo far the strategy has paid off handsomely. Boosted by margins of more than 40 on semiconductors in the second quarter of 2004 Samsung Electronics profits began to rise rapidly. By the third quarter the companys net profit was already almost twice what it earned in the whole of 2003 see chart. Then the signs of trouble began. Nevertheless despite the recent slowdown in earnings as The Economist went to press analysts were confidently expecting the company to report an annual net profit of around 10 trillion won 9.5 billion on January 14th. That is excellent by any measure. But it is not just with its earnings that Samsung wants to impress. The company is also investing heavily to ensure that history does not repeat itself. Research and development accounted for 2.9 billion in 2003 around 8 of revenue. More than 20000 of Samsungs 88000 employees work as researchers in 15 RampD centres around the world. Capital spending is more than 5 billion. The company is building the worlds most advanced factory for making giant liquid-crystal displays LCDs and between now and 2010 intends to spend around 24 billion on new chipmaking facilities despite falling chip prices. quotPre-emptive investment is critical to success in the semiconductor industryquot says Lee Kun-hee Samsungs chairman.And more money will be spent on brand-building. A decade ago Samsung was mostly seen as a producer of cheap televisions and microwave ovens. Mr Lee complained that while Samsung could build a TV that was technically just as good as one made by Sony his sets would sit at the back of a store or be piled up high in discount chains. He wanted to move upmarket. But Samsung like many Asian producers was a business geared to pushing products out of the door as quickly and as cheaply as possible. Switching tactics would involve wrenching changes. The 1997 financial crisis made the transition possible says Mr Yun. quotOur capital was almost completely erodedquot he adds. By July 1998 the company was losing 170 billion won a month. As employees realised that even a firm as big as Samsung could go bust a restructuring plan was launched. Its scope and its success came as a shock in a country that has some of the worlds most militant trade unions: around 30 of employees lost their jobs as the company slimmed down and sold more than 100 non-essential businesses. There was also a desperate need to cut inventories says Mr Yun. So he closed factories sometimes for weeks at a time. As more emphasis was placed on designing better more attractive products the firm also made a concerted effort to raise its profile in the minds of consumers.In 1999 Er