Another crisis theory from Samsung Electronics' Chairman has emerged, and this time it's about semiconductors. At the 20-nanorated DRAM mass production and semiconductor production line ceremony on the 22nd, Chairman Lee said, "We must be prepared for the heavy storm that will come over the semiconductor industry."
He went on to say, "By the many efforts of the staff, we were able to keep our leadership in technology." He then went on to mention his Storm Theory. With the competition between Korea, Japan, and Taiwan's companies being fiercer than ever and the economic crisis of advanced countries, the price of the DRAM is now at a record low, meaning the situation of the semiconductor industry could grow worse. Chairman Lee warned of a giant rage of a wave that will splash over the semiconductor industry. He also said that the company must concentrate on keeping its technological edge.
As Chairman Lee mentioned, the situation for the global semiconductor industry is very grim. The price of DRAM is half of the manufacturing price. Still, Samsung Electronics went on to mass produce the world's first 20-nanorated DRAMs this 22nd. It has been a year and 2 months since they produced nanorated DRAM. The 20-nanorated DRAM is 50% more productive and eats 40% less electricity than the previous 30-nanorated DRAM. By producing the 20-nanorated DRAM, Samsung Electronics, which is currently the market leader with a market share of 41.6%, will be able to widen the gap with its Taiwanese and Japanese competitors.
A Storm of Apples
Chairman Lee's comment about the storm points out the imminent restructuring of the DRAM industry due to decresed prices, and Samsung's biggest customer Apple's decrease in supply as it lost in the patent wars. Samsung may be free from restructuring but monopoly issues may occur as their market share in DRAM and NAND is about to break 50%. Both opportunities and crises coexist in semiconductors, although it was planned as a growth engine.
Chairman Lee may have also pointed out Apple trying to grow free from Samsung by allocating portions of application processors (AP) to TSMC, in contrast to Samsung being the only supplier of AP. If Apple were able to replace not only APs but also flash memory and DRAM, it would leave them no reason to purchase them from their fierce competitor Samsung Electronics.
The industry responded to Chairman Lee's opinion by saying "we must take the bull by the horns and create irreplaceable products and world class mass production technology." And it is also said that change is opportunity. With the launch of Windows 8, Samsung Electronics has earned a chance to advance into the greatest semiconductor market, the CPU.
Samsung's16th line is a flash memory assembly line capable of making over 200 thousand units each month, and has started producing ten thousand this month. Samsung Electronics is planning their production by demand, and is also planning to mass produce 10-nanorated NAND flash memory by next year.
The 20-nanorated 2GB DRAM produced from the 13th line is a green memory product, 50% more productive and with 40% less power consumption. Samsung Electronics is planning to develop a 20-nanorated 4GB DDR3 DRAM based mass storage product, and by next year produce 4GB, 8GB, 16GB, and 32GB versions of the product family.
Changing Samsung at Every Crisis
Chairman Lee's crisis theory has appeared again. Each time Chairman Lee has expressed a crisis theory, Samsung has tried something new. In 1993 in Frankfurt Germany, Chairman Lee proclaimed new management by saying "Change everything but your wife and children," making reference to a crisis theory. Afterwards Samsung Electronics quickly improved its structure and become one of the leading companies in the world. In 1995 Samsung Electronics become the first company to achieve a trillion won in profits. In 2007 Lee explained about the Sandwich Crisis in which Korea was stuck between the race of China catching up and Japan leading the way, and last year after returning to management he talked about another crisis.
With his comeback in March, Chairman Lee alerted every one of the oncoming crisis by saying "The present is at risk. World-class companies are crumbling away, and so could Samsung. In 10 years the product and product families that represent Samsung will vanish. We must start over. There is no time to hesitate, we must march forward and not look back."
Afterwards Samsung Electronics announced new industries that were to be cultivated to be their new growth engines. Without the crisis theory of Chairman Lee Kun Hee, they could have been items that Samsung would only pass on by. Upon receiving the inspection results of Samsung TechOne last June, Chairman Lee commented that "Samsung's pride of being a clean organization has been damaged. The whole of Samsung group is now corrupted." With this statement, Samsung which had been overlooking its wrong customs had changed.
Without Chairman Lee's crisis theory, the ceremony on the 22nd for the celebration of the operation of Samsung Electronics' largest memory factory and the world's first 20-nanoscale DRAM mass production facility could have ended in a internal party. But with Chairman Lee Kun Hee's theory, the staff is again full of tension.
But Chairman Lee's concern was that the crisis and menace that was about to come was as large as a typhoon. The key points of his new crisis theory is this: they may be competitive in the memory semiconductor market in which they have been leading for ten years, but the threat that comes from the new non-memory semiconductors has not reduced.
The biggest threat comes from dinosaur companies. Already typhoon-sized threats have started, and the competition is slightly different from the memory market. Apple, Samsung's biggest customer, has just thrown a direct hit to Samsung with a patent suit, and they have also changed their memory and AP dealers to someone else. And it is inevitable to fight against Intel, the biggest semiconductor company, in the CPU market that Samsung had just entered.
Every time Chairman Lee had presented a crisis theory, Samsung Electronics was able to overcome it by a quick response and strategic preparation. Chairman Lee's expression of crisis management was used because of this. Unlike earlier pessimistic crisis theories, this crisis theory starts from being positive. Chairman Lee's new crisis management has begun.