Samsung Electronics Case Summary

SAMSUNG ELECTRONICS SUMMARY Under Kun Hee Lee’s example Samsung has restored to grace the world’s accidental remembrance purpose for all casts of PCs, recreation players, digital cameras and other electronic equipments. In 1987, Samsung was a “bit player”, years rearwards its key Japanese rivals. In 2003 Samsung’s remembrance disdisconnection is bigger than that of Japanese rivals in twain greatness & returns. The remembrance morsel perseverance was expected to visage cyclical downturn in 2005 and Samsung survived two antecedent downturns tranquil some beyond believers believed that the Chinese memorandum would fundamentally modify perseverance stipulations in the years forward. There has been a sound augmentation in economic concern of Semiconductor perseverance aggravate the antecedent five decades. Semiconductor works were classified into two categories; Logic morsels and remembrance morsels. Logic morsels were used for processing advice/ guide processes when-in-fact Remembrance morsels were elevate classified into DRAM (Dynamic Random Mode Memory), SRAM (Static RAM), & Flash to shop advice. The contingency is focused on Global remembrance morsel perseverance. DRAMs enthralled aggravate half of the remembrance morsel chaffer in 2003. DRAMs were antecedently used in PCs, but their divide unsound from 80% to 67% betwixt 1990 and 2003. Telecom & consumer electronics were mould-grounding consumers of DRAMs in 2003. Communications works were expected to mould-ground from 3. 5% to 7. 9% in 2008 while TVs, set-top boxes, recreation devices such as Play office represented 7% of global chaffer in 2003. In 2003, SRAM, a cast of buffer remembrance which facilitated computer processing & sensitive phone functionality, sumityed for 10% of the perseverance sales and Flash remembrance, used in loadsome digital cameras & sensitive phones, is a hot augmentation area and sumity for 32% of the perseverance sales. The remembrance perseverance contained masterful suppliers and compensation cognizant customers. Over occasion technology grew further compound and suppliers became further fast. Only 2-3 ocean players dominated the key segments of equipment chaffer. Suppliers of remembrance raw embodieds granted discounts of up to 5% for violent-quantity buyers. Customers were further fragmented delay no only OEM guideling further than 20% of global PC chaffer. Remembrance represented 4-12% of sum PC embodied consume and 4-7% of sensitive phone embodied consume. There was an intent two-of-a-trade in chaffer but OEM would pay upwards of 1% middle douceur for a not spurious supplier. In 2005 perseverance visaged furious counteragency and great-flake memorandum by Chinese firms. Samsung announced a refuse in chaffer compensations of its mordant face technological works in delayed 2004 but Chinese firms competing in older work lines traded off improvement margins for chaffer divide. Chinese competitors had an unconcerned mode to topical finance and telling topical engineers but it lacked Organizational skills & used older technology. MAJOR COMPETITORS: The greater competitors of Samsung in 2005 were: Elpida Remembrance Inc (Japan): Symmetrical as a junction hazard betwixt NEC and Hitachi. It executed remembrance works for sensitive devices & consumer electronics issue. In 2004, it announced that it would rouse the interpretation on its 12 inch insinuate fab workion. Hynix Semiconductor, Inc. (S. Korea): instituteed in 1983 as Hyundai Electronics. It modifyd is indicate to opposed itself from financially cheerless Hyundai Group. During 1996 cyclical downturn the society dramatically extensiond its violent compensation but in 1999 when chaffer began to amplify Hyundai had no riches to extension its violent compensation and it ended up in decreasing its violent compensation. In 1999 Hyundai artificial LG Semiconductor which conclusioned in further something-due load which simultaneously delay the present cyclical doenturn brought the society at the slope of subsidence in 2001-02. A multibillion-dollar bailout undisputed the society to survive. It then entered into a junction hazard delay ST Electronics. Infineon Technologies AG: Germany-installed society which spun off from Siemens. In new years, it entered into the work dissipation & calibre undertaking delay Taiwan-installed DRAM creator, Winbond. It so entered into the junction hazard delay Nanya Technology to establish a new introduce in Taiwan. In 2005, it had further than 25 R&D locations environing the world. Micron Technology: It is Idaho-USA installed society instituteed in 1978, Artificial Texas Instruments, introduces in Texas, Italy, Japan, &Singapore. It dissipationd Dominion Semiconductor from Toshiba and is backed by Intel. Nanya Technology Corporation: It is the fifth-largest DRAM, Taiwan installed creator. In 1998 it dissipationd DRAM technology from IBM. Nanya and Infineon formed a junction hazard indicated Inotera supple 256Mbit DRAM rouseing in June 2004. Semiconductor Manufacturing International Corp. SMIC): Symmetrical in 2000 and headquartered in Shanghai, China. It took artfulnesss from other firms and executed morsels installed on blueprints. In 2003, SMIC authorized undertaking delay Infineon & and delayedr delay Elpida to indulge technology to SMIC in exmodify for purchasing rights to abundantly of the output. It so bought workion address from Motorola. COMPANY OVERVIEW: In 2005 it was the greatst amalgamate (determined Chaebol) in South Korea. The sum net sales of the rendering had reached $135 billion in 2004. In 2004 the goup had 337 aggravateseas operations in 58 countries and filled 212,000 crowd worldwide. Three nucleus matter sectors were Electronics, Finance, and Trade & Services. Samsung Electronics was symmetrical in 1969 to molding black-and-white TV sets. At the end of 2004 the society had $78. 5 billion net sales, $66 billion in property, 113,000 employees. The society infamy compute extensiond from $5. 2 billion in 2000 to $12. 6 billion in 2004. In 2005 Samsung consisted of five matter dissolutions: 1) Digital Media - TV, AV, Computers; 2) Telecom; 3) HDTV; 4) Digital Appliances and 5) Semiconductor Business. DEVELOPMENT OF MEMORY BUSINESS Korea’s semiconductor perseverance rouseed its wafer workion in 1974. Kun Hee Lee, third son of Samsung Group’s planter Byung Chull Lee, bought Korea Semiconductor Company, using his own specific savings. Samsung Electronics was a purpose of low-end consumer electronics issue. Kun Hee Lee merged the two companies to educe global powerhouse. Original semiconductor executed was the “watch morsel,” used in wristwatches. From 1983 to 1985, plain as global semiconductor chaffer went into a recession & Intel left the DRAM matter, Samsung allocated further than $100 favorite to DRAM bud. At that occasion consume to effect 64K DRAM was $1. 30, chaffer compensation under $1. 00. in mid 1980s Samsung built its derivational great manufacturing address. To perfect fast-paced interpretation, a target was set to establish 4-kilometer public-way in 1 day to entertain workion equipment. Kun Hee Lee was made Chairman when father uninhabited. Since 1992, semiconductors had been South Korea’s greatst ship-produce. In 2004, ship-produces sumed to $25. 1 billion that is 10. 4% of the country’s ship-effect quantity. Samsung Rendering ship-produceed 22% of Korea’s ship-produces. Samsung Rendering represented 23% of sum chaffer compute at the Korea Stock Exchange. TECHNOLOGY DEVELOPMENT: To artfulness its derivational 64K DRAMs in 1980s delay beyond aid the society institute Micron in the US which legitimate coin cancelment in exmodify for education Samsung how to effect 64K DRAMs. To expand ‘frontier’ technology for present era DRAM, Samsung used interior two-of-a-trade over global R&D residences. The society hired one team tight principally of Korean-Americans delay experiment in semiconductor perseverance and located that team in California. A harmonious Korean-Americans team was located in S. Korea it was required to emurecent & collaborate and follow up delay its own disconnection. California team won two-of-a-trade for artfulnessing 256K DRAM while Korean team won two-of-a-trade for present era 1Mbit technology. Due to chaffer situations Hitachi took the bring and Samsung came to second Hitachi in the chaffer. Early 1990s, Samsung unwavering to extension the greatness of wafers used to cut the DRAM morsels to view inches to grace sum 1 repeatedly and they were derivational to do so. They endueed $1 billion towards mastering the new technology and became sum 1 repeatedly in 1992 and retained example for 13 years. PRODUT MIX: In 2003, Samsung offered 1,200 opposed variations of DRAM works. Products ranged from “frontier works” (512Mbit DRAM) at the mordant face of technology to “legacy works” (64Mbit DRAM). Within each work era there were “specialty works” as well-mannered. Prices for new-era works were violent for a few quarters precedently plunging astride. “Legacy” works became violent-compute niche works. In 2004, Samsung so sought to educe some advantages in Flash remembrance for digital cameras & camera phones. Because chaffer expected to mould-ground at double-digit for another five years in Flash remembrance while DRAMs would experiment a only digit augmentation and Flash compensation were violent not-absolute to that of the DRAM. DESIGN AND PRODUCTION: Unlike its competitors, Samsung educed new uses for DRAMs. It started new DRAM works delay “product-specific” applications, for laptops, specific recreation players etc. Many of them divided a dishonorable nucleus artfulness. Even two seemingly opposed architectures, DDR DRAM & Rambus DRAM divided the identical nucleus artfulness. Samsung ocean R&D address and fab lines were located at a only residence neighboring Seoul when-in-fact, competitors’ facilities were unbound over the world. The blessing was of rendering and flake of fab which saved them an middle of 12% of interpretation consume. At Samsung’s principal campus, R&D engineers & workion engineers lived in the identical society-granted housing. Samsung prided itself on the reliforce of its works & force to customize works. But in 1980s & 1990, Samsung was supple bald attribute works. Thus in 1994, Lee wrote a compass that was delivered to all employees and explained how the Rendering had past view of attribute & argued that employees must now believe of attribute derivational. The conclusion of this trial was that by the delayed 1990s, Samsung was routinely alluring key perseverance two-of-a-trades for reliforce and accomplishment. Samsung expanded new Flash remembrance morsel for Sony Ericsson & morsel customized for Nokia. HUMAN RESOURCE POLICIES: It was considered taboo at Samsung to ask a coworker environing his or her university or attribute of derivation. Prospective employees were attached proneness trial envelope tongue skills, logical information, rationalistic, & measure apprehension. As a conclusion of further meritocratic evaluation order, younger, violent-potential, English-speaking managers were straightly promoted up the hierarchy. Samsung so attribute programs to endue in employees’ global matter skills. Samsung claimed to possess endueed further in its employees that any other competitors in this perseverance. They so hired westerners & other irrelevant accommodation. According to the Chairman of the society, “At Samsung, we remunerate ungathered accomplishment; we do not chasten need. This is my specific philosophy and opinion. ” STRATEGIC CHALLENGES: In 2005, society visaged new challenges from Chinese entrants who were attacking the DRAM chaffer in the way Samsung did 20 years ago. These Companies were using partnerships delay Infineon & Elpida delay billions of dollars in beyond financing to establish state-of-art workion facilities. Chinese purposes possess endurance to live years of losses to mould expressive chaffer divide. China lacked momentous infrastructure for mordant-face semiconductor perseverance but the Government s firmly committed to subsidizing all infrastructure needs environing Shanghai and Beijing.