Samsung’s Success in Semiconductors

Despite many criticism and skepticism when entering the semiconductor sector, Samsung has surprised the world in the memory chip business. It only took a decade for Samsung with no prior experience in semiconductors to become the top contender in the worldwide memory chip sector.

Samsung’s semiconductor business represents a microcosm of the growth process of Korea’s high tech industry. Samsung’s entry into the semiconductor business indicates a significant shift toward high-tech development in Korea’s overall industry landscape.

When Samsung had to compete on the base of cost advantage and weak technological competence, Samsung had to enter a mature chip business, or, DRAM. Facing reluctance to transfer technology to Samsung, Samsung had to find a way around securing the technology. It identified the U.S.-based financially troubled companies. At the same time, it intensified its R&D efforts both in process and product technologies...

Korea’s semiconductor business took its first steps in the 1960s...

Samsung’s entry into the semiconductor business was heavily influenced by the determination of the late B.C. Lee, founder of the Samsung Group, despite unfavorable external conditions and lack of internal technological competence. The late chairman B.C. Lee thought Samsung needed to secure semiconductor if it wished to further electronics products after experiencing shortage...

Samsung’s choice of developing memory chips, especially DRAMs was strategic, considering its competitive position and technological competence...

The memory business required lumpy investment scale. Since Samsung could not accumulate funds on its own in its early days, it had to borrow for investment...

Samsung has pursued technological accumulation successfully in the memory area.Its technology development trajectories in DRAMs show the reverse pattern of innovation process from...

Samsung’s technological progress took place during the 1980s. Samsung had to acquire production technology first. Samsung became the world leaders in the DRAM market by the early 1990s by following the footsteps of Japanese semiconductor firms...

Samsung sequenced the assimilation of transferred technology from the easiest to the progressively more sophisticated: from assembly processes to process development, then to wafer fabrication and inspection...

When Samsung successfully developed the 64K DRAM chip, making Korea only the third country in the world to produce DRAM chips after the U.S. and Japan, it triggered the entry of other Korean chaebols into the semiconductor industry. Samsung Semiconductor spearheaded a path for other Korean companies to follow...

During the 1990s, Samsung became confident in major technological categories: fabrication, design, assemble, and testing technology...

Since the DRAM business is characterized by its competitiveness based on scale of economy with limited product lines, cost was the key competitive factor. Samsung hence religiously pursued cost competitiveness by increasing yield...

Samsung not only produced a variety of improved versions of DRAM but also continuously developed next generation DRAMs, producing 64M in 1992, 256M in 1994 and 1G DRAM in 1996. Since Samsung developed and mass produced the world’s first 64M DRAM in 1992, it has secured its top position in the memory market...

Although memory chips in the early days of chip development were strategically chosen, Samsung was well aware of the high market risks of memory products in the semiconductor industry. After all, the non-memory chip business constitutes more than three quarters of the worldwide chip market. Samsung with significantly enhanced capabilities and success in the memory product field endeavored to expand into the non-memory chips, but its efforts did not result in fruitful outcomes in the 1990s...

In the case of semiconductor industry, the role of the Korean government remained minimal. Even when the Korean government stepped in, its role was limited...

Samsung purposefully created a crisis to expedite technological learning...

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