Samsung Electronics’ semiconductor chief Jun Young Hyun has warned that South Korea’s largest company risks being trapped in a “vicious cycle” unless it changes its corporate culture, just months after his appointment and as it tries to catch up with SK Hynix in Nvidia’s memory accelerator business.
Image source: Samsung Electronics
Last year, Samsung faced serious difficulties due to a lack of internal innovation and poor communication between departments. In a short memo, Chung Yoon-hyung said that to maintain growth, the company must remove communication barriers between departments and stop covering up problems: “We need to restore the culture of fierce debate that is unique to the semiconductor industry. If we rely on the market without restoring fundamental competitiveness, we will be stuck in a vicious cycle that will repeat last year’s situation.”
Chung Yoon-hyun’s statement betrayed frustration with Samsung’s missteps in the Nvidia memory accelerator market. While Samsung recently reported its fastest net profit growth since 2010, the new head of the division listed a host of issues that are undermining the South Korean giant’s long-term competitiveness. Crucially, much of that growth was due to a general market recovery, not the company’s innovation.
However, the conglomerate has begun to make progress in narrowing the gap with SK Hynix. Samsung has achieved a major milestone by receiving long-awaited approval from Nvidia for its high-speed HBM3 memory chips and expects approval for the next generation, HBM3E, in two to four months. This shows that the company is taking steps to improve its position in the market.
It is unusual for South Korea’s largest company to be playing catch-up, as Samsung has historically been a market leader thanks to its scale and engineering prowess. But the current challenges highlight the need for not only technological but also cultural change within the company.
“We are currently in a difficult situation. With our accumulated research and know-how, we are confident that we will quickly regain our competitive advantage,” said Jung Yoon-hyun. By recognizing its mistakes and actively working to correct them, Samsung has a chance to regain its leading position in the semiconductor market. However, without significant changes in its corporate culture, the company risks continuing to face the same problems as before.
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