Samsung Electronics’
Semiconductor Division
30 March 2004
Session B, Group 7:
Chen, I Chun
Fernandez Zabelguelsky, Luis
Mastrostefano, Adrian;
Choi, Seung Hyun
Halbach, Frank
De Meyer, Frederik
Agenda
Industry
overview
Company
Structure
Agenda
 Introduction
 Industry Overview
 company structure
 Strategic Analysis
 Summary
 Recommendations
Strategic
Analysis
Summary
Recommendations
Agenda
Industry
overview
Company
Structure
Strategic
Analysis
Summary
Recommendations
Semiconductors
 Neither conductor nor insulator
 E.g. Silicon, Zinc, Germanium
 To dope = add impurities
DRAM
 CPU: read / write data very fast
 every cell is randomly accessible
 Dynamical = content needs to be refreshed
Agenda
Industry
overview
Company
Structure
Strategic
Analysis
Manufacturing
 Blank wafer production
 Silicon ingot
 Slicing + polishing
 Semiconductor fabrication




Oxidation + photo resist coating
UV exposure + Development
Etching + Resist removal
Doping + Layering
 Assembly & packaging
 Back grinding
 Testing + cutting
 Wire-bonding + packing
Summary
Recommendations
Agenda
Industry
overview
Company
Structure
Strategic
Analysis
Summary
Recommendations
Semiconductor Industry 2002 + Forecast
Semiconductor Industry 2002
6%
Marketsize 2002:
US$ 75 billion
Samsung:
US$ 9.2 billion
= 13%
32%
7%
7%
8%
8%
8%
13%
Intel
Samsung
ST Micro
TI
Toshiba
Infineon
NEC
Motorola
Philips
Hitachi
Agenda
Industry
overview
Company
Structure
Strategic
Analysis
Summary
Recommendations
DRAM Industry 2Q 2003
DRAM Industry 2Q 2003
Marketsize 2Q:
US$ 3.7 billion
Samsung:
US$ 1.2 billion
= 32%
4%
32%
4%
Samsung
Micron
Infineon
Hynix
Nanya
14%
Other
15%
Characteristics of Industry
 CAPEX: Capital Spending
 short Product Life Cycle
 R&D intensive
19%
Agenda
Industry
overview
Company
Structure
Strategic
Analysis
Summary
Recommendations
Samsung Group
Electronics
Machinery & Heavy
Chemical
Finance
Others
Samsung Electronics
Semiconductor
Telecommunication
Digital Media
Home Appliances
Division
Industries
Division
Division
Agenda
Industry
overview
Company
Structure
Strategic
Analysis
Summary
Recommendations
Five Forces Analysis
Bargaining Power of Buyers
- PC manufacturers consume most of
production (75-80%); price dictated by supply
- Commodity-like product
Threat of New Entrants
-Capital and R&D
intensity are a
considerable entry barrier
Rivalry Among Competitors
-High exit barriers (large investments)
-High concentration; high competition
-Cyclical volatile demand
-Only first movers make profits
-Large volume required
-Low cost + high utilization
Bargaining Power of Suppliers:
- Low power by raw material suppliers
- Power by wafer equipment manufacturers
Threat of Substitutes
- Samsung invests in
substitutes
- Other alternatives not
competitive in price
Agenda
Industry
overview
Company
Structure
Strategic
Analysis
Summary
Recommendations
SWOT Analysis
Strengths
Weakness




 Relaying on DRAM
 Size
R&D & Manufacturing
Chaebol
Management style
Alliances
Opportunities
 Technology Innovation
 Branding
Threats
 New Technologies
 Rambus
 Competitors’ Alliance
Industry
overview
Agenda
Company
Analysis
4+2 Analysis
Strategic
Analysis
Summary
Recommendations
Four Strategic management categories to excel
1. Clearly Stated Focused Strategy
Division mid and long term goal: Provide the world best device solution
•
•
•
Achieve u$s 30 billion sales in 2005
Provide total solution for digital appliances
Memory, TFT LCD and LSI market leader
Memory
LSI
LCD
Vision
*Solution provider
*Memory leader
*Market penetration
*Product
enhancement
*Highest quality
*Technology
leadership
Strategy
*Differentiation
*Diversification
*“Sinthesysation”
*Strategic
partnership
development
*Wiseview Brand
Agenda
Industry
overview
Company
Structure
4+2 Analysis
Strategic
Analysis
Summary
Recommendations
Four Strategic management categories to excel
2. Performance Oriented Culture
Culture description creates consciousness about industry
Manufacturing Orientation and permanent performance evaluation
3. Fast, Flexible, flat company structure
Fast decision making in spite of hierarchical structure
Improvements in organizational structure may strengthen the firm.
4. Flawless operation execution
Process automation and design improvements
Strong Quality Control implementation
Agenda
Industry
overview
Company
Structure
4+2 Analysis
Strategic
Analysis
Summary
Recommendations
Additional categories to excel
•Develop Innovation that transform industry
Largest and most innovative memory manufacturer ( in 1999 2001 among top 10 firms in U.S. patents)
•Keep Leadership committed to the business
Commitment shown in decision making about investments, HR
hiring and motivation
•Make growth happen with mergers and acquisitions
Joint R&D developments
Joint investments and technology transfer
Partnerships with start-ups
Agenda
Industry
overview
Company
Structure
Strategic
Analysis
Summary
Recommendations
Value, Cost and Speed
CUSTOMER
SPEED: critical in DRAM industry
CUSTOMER
Leadership due to
• organization structure
• Chaebol start
• Decentralization then
• Future?
• importance of people
VALUE:
Chip speed / capacity
• focus on real customer needs !
• long-term relations with customer
• price premium in spite of
commodity product
SAMSUNG
COST/
SPEED
COMPETITORS
COST: declining cost per megabite in
COMPECOST/
Industry
SAMSUNG
SPEED
Cost Advantage due to
• economies of scale
• process innovation
• new demand sources
TITORS
Agenda
Industry
overview
Company
Structure
Strategic
Analysis
Summary
Summary
 Technological Understanding
 Industry and company overview
 Strategic analysis




Five Forces: Rivalry
SWOT: R&D
4+2 : Strategy
Value-Cost-Speed: Speed
Recommendations
Agenda
Industry
overview
Company
Structure
Strategic
Analysis
Summary
Recommendations
How to keep the No. 1 status ?
 Keep bold and aggressive management
style
Recommendations
 Use tech hype cycle to create awareness
MRAM
FRAM
Agenda
Industry
overview
Company
Analysis
Strategic
Analysis
Summary
Recommendations
Recommendation
 Reduce the geographical concentration of the
R&D facilities
 Diversify to less cyclical value added
businesses to offset cyclical effects
 Reduce bureaucracy
 Change organizational structure to a more
flexible one, as a matrix organization based
on the product mix
Questions