The Samsung group reportedly has internally decided to skip all commemorative events for the anniversary of the launch of the new management initiative in 2024, which could be linked to the major challenges the company is currently facing, according to South Korean media Yonhap News Agency.
The initiative was launched 31 years ago by the late chairman of Samsung Lee Kun-hee in June 1993 with Lee making his famous declaration in Frankfurt, Germany, "Change everything, except your wife and children." The reform eventually led Samsung to become a global electronics giant.
The sluggish global economy and geopolitical risks are undermining Samsung's memory production business. Despite recovering from a loss of up to KRW15 trillion (US$11.81 billion) in 2023, Samsung's response to the High-Bandwidth Memory (HBM) sector and AI market has been slow. This puts the South Korean giant in an awkward position, lagging behind SK Hynix.
With the company's high-end executives being demanded to extend their working days per week to six and affiliates reportedly starting to adopt similar working schedules, many market observers believe most of Samsung's R&D staff is currently working under extensive overtime.
Samsung's union members had initiated a large-scale leave of absence in place of a strike as a counter move. Despite not directly impacting Samsung's semiconductor production, such a move has damaged its brand image and consumer trust.
Samsung's unusual move of replacing the head of the device solutions division, with another manager in late May, contrasting the company's usual protocol of assigning high-level executives at the end of the year, also hinted at possible crisis management, some market observers said.
Samsung has also experienced a major deceleration in mergers and acquisitions. Seeing difficulties in narrowing its gap with TSMC in the foundry business, Intel pushes keenly to catch up from behind, and its network business not performing as strongly as expected, the South Korean company has been downsizing its manpower to increase management efficiency.
Can Lee Jae-yong lead Samsung out of crisis?
Although Samsung's first AI phone, the Galaxy S24 became the top-selling smartphone worldwide in the first quarter of 2024, Apple, which shipped the most phones in 2023 still keeps Samsung in a cautious attitude.
The executive chairman of Samsung, Lee Jae-yong is still undergoing legal appeal despite being acquitted of the suspicion of illegal inheritance in the first trial. Industry professionals believe that in the face of Samsung's major challenges, Samsung's best bet is to begin large-scale acquisitions and investments in semiconductors and AI. However, decisions are yet to be announced after Lee's first trial.
