[Lee Jae-yong's New Samsung] ① The Path Samsung Walked Through Three Generations: Lee Byung-chul, Lee Kun-hee, and Lee Jae-yong

A Company That Made Televisions Now Produces Mobile Phones and Semiconductors
From Domestic No.1 to Global Giant: Samsung's Achievements Over 84 Years Under Three Chairmen 'Lee Byung-chul - Lee Kun-hee - Lee Jae-yong'

[Asia Economy Reporter Park Sun-mi] A company that used to make small home televisions has expanded into mobile phones and semiconductors, surpassing domestic No.1 to earn the title of a global enterprise. This is the achievement built over 84 years through three chairmen: 'Lee Byung-chul - Lee Kun-hee - Lee Jae-yong.' The brand value of Samsung Electronics has soared to $87.7 billion (approximately 124.5 trillion KRW based on an exchange rate of 1,420 KRW/USD), ranking 5th in the world. Despite the negative perception repeatedly associated with the third-generation succession of conglomerates, looking back on Samsung's journey, the accomplishments achieved through the first to third generations are clear.

◆ Hoam Lee Byung-chul, the predecessor chairman of Samsung... ‘Big, Strong, and Eternal’ = The cornerstone of today’s Samsung is Samsung Sanghoe, established by Hoam Lee Byung-chul in March 1938 in Daegu. Hoam personally chose the name by combining 'Sam (三),' the number most favored by Koreans symbolizing big, many, and strong, with 'Seong (星),' meaning bright, high, and eternally shining.

After founding Samsung Sanghoe and acquiring Joseon Brewing (1939), he smoothly expanded the business, consecutively establishing Samsung C&T Corporation in 1951, Cheil Jedang in 1953, Cheil Industries in 1954, Korea Fertilizer in 1964, Samsung Electronics in 1969, and Samsung Heavy Industries in 1974, leading major domestic industries. In particular, Hoam concluded that the electronics industry was perfectly suited to Korea’s economic stage in terms of technology, labor, added value, domestic demand, and export prospects, and he even persuaded the government to support this vision when founding Samsung Electronics.

As a result, within nine years of its founding, Samsung Electronics reached a production milestone of 2 million black-and-white televisions in 1978, surpassed 10 million units in May 1981, and exceeded 5 million color televisions in March 1984, securing its position as the domestic leader. Hoam, who laid the foundation of the electronics industry, resolved to develop semiconductors at the age of 74 and established Samsung Semiconductor in 1978. His judgment that the fate of Samsung and the nation depended on the success of Samsung Semiconductor proved accurate.

Hoam’s business expansion was based on the first principle of his management philosophy, 'Business for the Nation (事業報國).' This means contributing and serving the country, society, and ultimately humanity through business. In November 1976, in 'My Management Theory (Federation of Korean Industries Bulletin),' Hoam stated, “Isn’t a person happiest when they truly know what they live for? Fortunately, I have lived knowing that business is my entire life, and my conviction that my path lies in business for the nation remains unwavering.”

◆ Lee Kun-hee, who laid the foundation for an IT powerhouse... Dreaming of a 100-year Samsung = Samsung began to truly blossom in the semiconductor industry starting July 1986 with the production of 1-megabit DRAM. After securing technological leadership with the development of 64-megabit DRAM and increasing production volume, Samsung achieved the No.1 market share, becoming the undisputed global leader in both technology and production. Upon his inauguration as chairman in 1987, the late Chairman Lee promised to “grow Samsung into a world-class top-tier company.”

He chose mobile phones as Samsung’s new growth business and, following semiconductor success, established the 'Anycall legend,' propelling Samsung to the ranks of global enterprises. In August 1995, Anycall surpassed Motorola, which had held the No.1 position in all mobile phone markets, capturing a 51.5% market share and becoming the domestic leader. His prediction, “The era will come when everyone owns one wireless terminal. We must value telephones,” proved accurate.

Samsung underwent another transformation when the late Chairman Lee declared the 'New Management' in 1993, initiating sweeping innovations across all management sectors. In the early 1990s, Samsung was complacent, resting on its domestic No.1 status without a sense of crisis. The late Chairman Lee pointed out, “We are blinded by arrogance and do not truly recognize the crisis. We do not see our own shortcomings. I feel a cold sweat on my back, sensing that if we continue like this, we might collapse.”

The 'New Management' embodied the will to break the vicious cycle of quantity-focused management and realize a virtuous cycle management structure where quality and quantity harmonize. Focusing on quality-oriented management, the late Chairman Lee succeeded in transforming Samsung from 'Korea’s Samsung' into 'Samsung of the world' since his inauguration in 1987. Sales, which were 10 trillion KRW at the time of his inauguration, increased approximately 39 times to 387 trillion KRW in 2018; profits rose 259 times from 200 billion KRW to 72 trillion KRW; and market capitalization surged 396 times from 1 trillion KRW to 396 trillion KRW.

◆ Lee Jae-yong, chairman standing amid crisis... What’s next after home appliances, mobile phones, and semiconductors? = Chairman Lee Jae-yong has the ambition to succeed the late Chairman Lee Kun-hee and grow Samsung into a true top-tier company, achieving 'Seung-eo-bu (勝於父)'?surpassing his father. His goals include ▲business expansion through new business discovery ▲establishing a culture of compliance ▲expanding communication and support with the industrial ecosystem ▲raising employee pride and public trust to create a 'new Samsung befitting national dignity.'

However, the reality Samsung faces is harsh. “Unfortunately, in recent years, we have not moved forward. We have not led new fields, and in existing markets, we face fierce challenges from pursuers.” These reflections and resolutions were revealed by Lee Jae-yong at a meeting with executives held on the 2nd anniversary of the late Chairman Lee Kun-hee’s passing, shortly after his inauguration as chairman on the 27th of last month, starkly exposing Samsung’s crisis.

Chairman Lee took office amid an uncertain global economic environment burdened by the 'three highs'?high exchange rates, high interest rates, and high inflation?where domestic companies including Samsung are struggling to grow. To overcome the limitations of being trapped in the business cycles of home appliances, mobile phones, and semiconductors discovered and grown by his predecessors, it is urgent to set a new direction to transform into a 'New Samsung.'

First, Chairman Lee is poised to focus on technology-centered management emphasizing a super-gap technology strategy. This year, Samsung announced large-scale investment plans in ▲semiconductors ▲bio ▲new growth IT sectors and declared itself a 'company opening a new future' leading global industrial restructuring (total investment of 450 trillion KRW over the next five years, including 360 trillion KRW domestically).

To achieve the Semiconductor Vision 2030, Samsung will expand system semiconductor investments to 171 trillion KRW and strengthen research and development (R&D) in next-generation communications, AI, robotics, supercomputing, and other future technologies to lead the 4th Industrial Revolution. In particular, bio will be nurtured as the 'second semiconductor legend.'