'Relief Pitcher' Marks One Year as Head of Samsung DS Division
Restructuring the Organization First for 'Ultra-Gap' Technological Competitiveness
Streamlining Reporting, Focusing on the Field, and Establishing an HBM Development Team
Global Strategy Meeting Next Month... Expectations for Results in the Second Half
In May of last year, Samsung Electronics made a surprise personnel decision. Younghyun Jeon, who was then the head of Future Business Planning (Vice Chairman), was appointed as the head of the DS (Device Solutions) Division, which oversees semiconductors. This was a highly targeted appointment that came at an unusual time, not at the end of the year. Vice Chairman Jeon also decided to directly lead the Memory Business Division. By breaking Samsung's usual policy of separating division heads and business unit heads, this move reflected the company's sense of crisis. On May 21, it will be one year since this 'relief pitcher' took the mound.
Immediately after taking office, Vice Chairman Jeon received briefings on issues facing each business unit and began diagnosing the organization. Less than two months later, in July 2024, he established a dedicated development team for high-bandwidth memory (HBM), initiating efforts to restore technological capabilities. When the preliminary results for the third quarter were announced in October of that year, he issued an 'apology statement,' saying, "All responsibility lies with the management leading the business." It was the first time that Samsung's top leadership had issued a separate message regarding business performance.
◆"The sense of crisis inside is actually great"= A senior Samsung Electronics official stated, "Many members of management perceive the crisis as even more serious than it appears from the outside," and added, "We will maintain a low-key approach until we demonstrate a clear recovery." He emphasized the difficulties in the semiconductor business by saying, "While the home appliance segment experiences only moderate sales fluctuations depending on economic conditions, semiconductors see significant performance swings based on technological gaps and market demand."
Samsung's semiconductor business is largely divided into three areas: memory, foundry (contract manufacturing), and system LSI (design). Traditionally strong in memory, Samsung ceded its leadership in the HBM market to SK Hynix, creating a crisis. In the foundry market, where Samsung had entered ambitiously, the gap with Taiwan's TSMC has widened further. The System LSI Business Division, which designs products such as Exynos, has also fallen behind competitors like Qualcomm.
◆To restore technological leadership, the organization must change first= Vice Chairman Younghyun Jeon, who comes from the Memory Development Division, is considered to have a deeper understanding of internal issues than anyone else. Since taking over as head of the DS Division, he has focused on reorganizing the organization rather than making frequent public appearances. He believes the key to restoring technological competitiveness lies within the organization itself.
In his apology statement last year, Vice Chairman Jeon promised three things: restoring the fundamental competitiveness of technology, preparing for the future, and improving organizational culture. Technologically, he decided to redesign DRAM, and organizationally, he began a large-scale restructuring. In Korea's business environment, where visible results are important, addressing fundamental issues is not easy. Considering that it typically takes two to three years for results to materialize in the semiconductor industry, this was a bold move.
The organizational culture initiative 'C·O·R·E,' which he introduced in his first internal message, is a representative example. It stands for Communicate (solving problems through communication), Openly Discuss (drawing conclusions through intense debate regardless of rank or position), Reveal (honestly exposing problems), and Execute (making decisions based on data and executing them thoroughly). The 'relay executive discussion sessions' held five times in November last year were also part of this effort.
◆Don't just look at documents, get into the field= Vice Chairman Younghyun Jeon also overhauled the most basic reporting system. He significantly reduced the execution steps that previously required passing through team leaders, project leaders (PL), group leaders, executive directors, and vice presidents, assigning mid-level management roles to executive directors instead. The aim is to shift the center of management to the field.
'Line streamlining' is not just a structural change. The DS Division is massive in scale and has high demands for technology and quality, which led to a deeply entrenched multi-layered reporting system over time. As a result, it was difficult for proposals related to technology review or equipment investment to reach decision-makers from the field, and work focus suffered accordingly. Many frontline employees also complained that the system led to 'reporting for the sake of reporting,' which reduced execution capability.
Vice Chairman Jeon's decision to change the reporting system is seen as focusing on the 'field' and 'speed.' He sought answers to criticisms about declining yield and design capabilities, as well as delays in market response, by addressing organizational structure and internal culture. An industry insider explained, "The aim was to transfer real authority to create an environment where employees can immerse themselves in their work," and added, "Executives are now able to stay closer to and be more involved in the field."
◆It's only been a year; can we expect results in the second half?= Given the nature of the semiconductor business, it is difficult to expect a dramatic turnaround in just one year, but there are hopes that results will gradually begin to show. A senior Samsung Electronics official said, "Although challenging market conditions persist, we internally expect things to improve somewhat in the second half of the year."
Next month, Samsung Electronics plans to hold a 'Global Strategy Meeting' attended by key executives and overseas subsidiary heads. This meeting, where major issues are shared and technology and sales strategies are discussed, is typically held twice a year in June and December. The June strategy meeting will focus on strategies for the second half, and within Samsung Electronics, there are predictions that visible results in the semiconductor division will gradually begin to appear from the second half of the year.
Vice Chairman Younghyun Jeon also outlined these plans at the shareholders' meeting in March this year. He said, "From the second half of the year, we plan to rapidly supply HBM3 12-layer products to the market," and added, "We are thoroughly preparing to avoid repeating trial and error in the HBM4 and custom HBM markets." He also explained, "In foundry, we will enhance the completeness of 2-nanometer technology and develop next-generation processes in the 1-nanometer range to establish strong technological and manufacturing capabilities in the global market."
◆Younghyun Jeon wearing four hats: When will the next head of the Memory Business Division be appointed?= However, concerns have been raised about Vice Chairman Younghyun Jeon shouldering the burden of four major roles. He currently holds at least four positions: Vice Chairman and CEO, head of the DS Division, head of the Memory Business Division, and President of the Samsung Advanced Institute of Technology (SAIT).
While he is supported by Yongin Park, President and head of the System LSI Business Division; Jinman Han, President and head of the Foundry Business Division; Seokwoo Nam, President and CTO of the Foundry Business Division; and Yongkwan Kim, President in charge of business strategy, there are still calls for the appointment of a new head of the Memory Business Division.
An industry insider commented, "Samsung's personnel principle is to leave positions vacant unless a suitable candidate emerges," and added, "With the shift to a sole CEO system, resolving the concentration of responsibilities has also become an important task."
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