Samsung should be cautious of falling into the same complacency as Intel.
There is an interesting story about Samsung’s foray into the silicon-chip industry, which was dominated by Japanese and American manufacturers in 1983. Lee Byung-chul, the founder of the South Korean chaebol, announced the company’s new strategy in what he called the Tokyo Declaration. He emphasized that despite the country’s lack of raw materials like oil, it possessed a well-educated and diligent workforce capable of venturing into chipmaking. As Geoffrey Cain recounts in his book, “Samsung Rising,” some Samsung executives were sent on an overnight march across the mountains from Seoul to toughen them up for the challenge. They arrived at Samsung’s first semiconductor factory, which was constructed in a record six months, and pledged to make the business a success before breakfast. Without sleeping, they then worked for 16 hours straight.
Whether you call it true grit or Samsung’s martial-style work ethic, the company surpassed its competitors and became the dominant player in the global market for memory chips. For over 30 years, it has led in DRAM, used for computer and server memory storage, and for over 20 years in NAND flash memory, used in mobile phones. However, since 2021, memory chips have experienced a boom-bust cycle in the semiconductor industry. It began with shortages, followed by a surge in capital spending, and has now resulted in the worst slump since the global financial crisis of 2007-09. Samsung Electronics, which includes the conglomerate’s semiconductor, display, and consumer-device units, is feeling the impact. On April 7th, while projecting a modest first-quarter profit, the company announced a reduction in memory-chip production to alleviate oversaturation in the market.
Samsung has long held an unassailable lead in the memory-chip business. Despite regular market downturns, the company has always…
2023-04-13 08:28:56
Original from www.economist.com
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