System semiconductors should be another critical point

There is a scientific term called “critical point.” It is a point at which the quality of a substance changes as the temperature and pressure go up. A critical point entails qualitative change. Korea’s major businesses have gone through several critical points as they grew.

Samsung Electronics is the top-selling smartphone and DRAM manufacturer in the world. It went through several critical points since it started as Samsung Electronics Engineering in January 1969. Those critical points include Chairman Lee Kun-hee’s 1993 management announcement in Frankfurt, Germany where he said “Let’s change everything except for our spouses and children,” and “Anycall burning” in 1995 where he destroyed and burned 150,000 defective devices. There is also the “guard Kim Young-sam incident.”

One night in 1997, Lee called the security office and said, “I am Lee Kun-hee.” The security guard who answered the phone thought it was a prank and said, “If you are Lee Kun-hee, I am Kim Young-sam.” Lee hung up the phone and visited the security office right away to meet the security guard. “You represent our company during weekend nights. Do you respond to the customers in that manner?” Lee reprimanded. He directed all affiliates to improve their customer service after that.

Lee announced a full-scale change as he believed his company would not survive with defective products and even burned all ready-made products. He believed that he should cherish each and every customer to build a long-lasting business and tried to make the customer service of his company world-class. Those are some of the critical points that Samsung went through.

Hyundai Motor also had those moments. It launched its first automobile Cortina on November 1, 1968 only to be ridiculed by customers due to the low quality. It became a popular brand and exported cars abroad afterwards, but it was at the bottom of the 1998 J.D. Power automotive ratings, which is the most prestigious new car quality ratings in the U.S. However, in the 2018 ratings, Hyundai’s Genesis was at the top out of 31 brands. Kia’s Sorrento and Pride also ranked first in their vehicle type. Hyundai was able to make a dramatic rally to the top because it went through several critical points.

Hyundai Motor acquired Kia in the late 1998. It was when customers made complaints on the quality of Carnival. Hyundai Motor Chairman Chung Mong-koo was shocked by the J.D. Power ratings and had to do something about it. He told an executive of Kia to bring Carnival to his house in March 1999. A month later, he called all executives over to the Kia headquarter and told them there were quality issues as drawing circles with a chalk in the window above the slide door, under the seats and the chinks of the door. He found the issues by driving and disassembling the car. That was the start of his monthly quality meeting.

Samsung Electronics recently announced that it will invest 133 trillion won in system semiconductors over the next 10 years to become the number one in the world. I hope this is another critical point of Samsung Electronics.

Intel and Qualcomm hold a commanding lead in non-memory chips, dominating CPUs for PCs and APs for smartphones and tablets respectively. No one knows who will be the winner of the market when the era of 5G, IoT and AI arrives. I hope Samsung Electronics would make successful investments and Korea’s foundation for system semiconductors would grow stronger. I am anticipating Korea to become a semiconductor powerhouse that leads the world in both memory and system chips.


artemes@donga.com