Samsung should be wary of Intel-like complacency 

There is a good tale about Samsung’s entry into the silicon-chip business, which at the time—1983—was dominated by Japanese and American manufacturers. Lee Byung-chul, the founder of the South Korean chaebol, announced the new strategy in what he grandiloquently called the Tokyo Declaration. He said that though his country lacked raw materials such as oil, it had an educated and diligent workforce that was well equipped to turn its hand to chipmaking. As Geoffrey Cain recounts in his book, “Samsung Rising”, shortly afterwards 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, built in a record six months, and signed a pledge before breakfast to make the business a success. Then, without sleeping, they put in a 16-hour work day.

Call it true grit or call it Samsung’s martial-style work ethic. One way or another the company force-marched its way past the competition to dominate the global market for memory chips. For more than 30 years, it has been the world leader in DRAM, used for memory storage in computers and servers, and for more than 20 in NAND flash memory, used in mobile phones. Yet since 2021, memory chips have been at the forefront of a boom-bust cycle in the semiconductor industry, which started with shortages, was followed by a surge in capital spending and has now become the worst slump at least since the global financial crisis of 2007-09. Samsung Electronics, which includes the conglomerate’s semiconductor, display and consumer-device units, is feeling the pain. On April 7th, while projecting a meagre first-quarter profit, it said it would cut memory-chip production. This is an attempt to help reduce oversaturation in the market.