Samsung Electronics Chairman Lee Jae-yong recently gave a stern reprimand to executives, stating that "Samsung has lost its unique strength," and urged them to adopt a "do-or-die" mindset. While last year, Lee had called on executives to "acknowledge the crisis and face reality with a cool head" in response to the struggling semiconductor business, this time he raised the level of urgency, framing it as a matter of survival.
According to industry sources on the 17th, Lee shared the message at a recent seminar for Samsung executives, saying, "Samsung is facing a life-or-death survival issue. The management must reflect deeply, starting with themselves." As Samsung Electronics' semiconductor business continues to show no signs of recovery and its performance deteriorates further this year, it is interpreted that Lee issued a strong message to heighten the sense of urgency within the organization. Since the end of last month, Samsung has been conducting "Value Education for Restoring Samsung's Identity" for around 2,000 executives below vice president level across all affiliates, including Samsung Electronics.
This message followed a video featuring the management philosophies of the late founder Lee Byung-chul and the late former chairman Lee Kun-hee, along with some of Lee Jae-yong's previous remarks and content originally prepared for his New Year's message earlier this year. However, Lee did not appear directly in the video. Through his message, he emphasized, "What matters is not the crisis itself, but how we respond to it," and "We must invest for the future, even if it means sacrificing immediate profits." He also reiterated the importance of technology, stating, "We must uphold the tradition of prioritizing technology and preemptive investment," "Let's create the future with technologies that don't exist in the world," and "First, technology; second, technology; third, technology."
Lee's strong message was not simply due to Samsung's recent decline in performance. It is interpreted as stemming from a sense of crisis that the company's fundamental competitiveness is weakening. In its semiconductor business, Samsung Electronics underperformed market expectations due to sluggish demand for general-purpose (legacy) memory and delays in supplying high-bandwidth memory (HBM). The outlook for this year's performance remains bleak, following last year's results. According to an analysis by financial information provider FnGuide of reports from 18 domestic securities firms over the past three months, Samsung Electronics' operating profit for the first quarter of this year is expected to average 5.3724 trillion won, down 18.7% from the same period last year.
However, the bigger problem is that Samsung Electronics' position in the market is gradually shrinking. Last year, the global market share of Samsung Electronics' key products?including memory semiconductors (DRAM, NAND flash), smartphones, and displays?all declined compared to the previous year. Notably, Samsung lost its "overwhelming lead" in memory to SK hynix and is struggling against aggressive low-cost competition from Chinese companies such as Changxin Memory. Meanwhile, U.S. company Micron is rapidly catching up technologically, fueling concerns that Samsung is being "sandwiched" between competitors. In foundry (semiconductor contract manufacturing), the gap with Taiwan's TSMC is widening. This is why Lee emphasized a "do-or-die" mindset.
External experts, including professors, also diagnosed Samsung's crisis at the seminar. They reportedly pointed out, "Samsung has fallen into complacency, thinking it's enough to just do better than others, and has failed to improve its capabilities," and "The company is fixated on relative rankings and has not achieved qualitative improvement." Executives who attended the seminar responded that it was actually fortunate for the head of the company to directly mention the "crisis at Samsung," a topic previously considered taboo internally. One executive said, "Now that we've acknowledged the crisis, I believe this will become an opportunity to confirm Samsung's true strength."
Samsung presented each executive with a crystal plaque engraved with their name. The plaque bore the phrase, "A Samsung person who is strong in crisis, skilled at turning the tables, and relentless in competition." This is interpreted as a call for a more proactive attitude. Samsung Electronics plans to maintain an aggressive stance on research and development (R&D) and facility investment to secure future growth engines. Last year, the company invested a record-high 35 trillion won in R&D and 53.6 trillion won in facilities. Additionally, to accelerate new future businesses in the Device eXperience (DX) division, Samsung upgraded its existing "New Business Task Force (TF)" to a formal New Business Team.
