Basically, you can think of the Samsung Group as a multinational manufacturing conglomerate that consists of several affiliated businesses that are united under the Samsung brand. It is headquartered in Samsung Town, Seoul, South Korea. The Group is the largest South Korean chaebol (large company).
History
Founded in 1938 by Lee Byung-chul, Samsung is one of the world’s largest electronics manufacturers. In the 1980s, Samsung produced over 800 million mobile phones.
Samsung’s success in the 1980s stemmed from its strategy of making low-cost, mass-produced products. The company plowed profits into its R&D operations. During this time, Samsung was positioned as a global leader in semiconductor manufacturing.
As competition in the semiconductor industry intensified, Samsung changed its strategy. It started investing in semiconductor fab capacity. Fabs would be used to make DRAM, ASICs, flash memory, and baseband chips. This strategy helped Samsung’s factories stay open and operating during down cycles.
In the late 1990s, Samsung began to think about the next big thing. After a series of successes in the semiconductor business, Samsung made its first moves into the mobile market. The company produced a speech recognition phone in 2005. This product would be a major success and was the company’s most praised product.
By the end of the 1990s, Samsung had a full line of digital TVs. This success would lead to the formation of Samsung’s mobile division.
Samsung became one of the largest manufacturers of microprocessors in the world. During this period, Samsung was one of the largest producers of DRAM. It was also one of the first companies to use flash memory. The company was also one of the first to offer CDMA chipsets. By the end of 1998, Samsung had a CDMA chipset ready for internal use.
By the end of the 1990s, smartphones and the Internet were becoming more and more important to Samsung. Eventually, mobile would become one of Samsung’s largest and most profitable businesses. In 1999, the company launched its first Internet-ready phone. This phone would eventually be branded as the Samsung Galaxy.
Ownership structure
During the Asian financial crisis, South Korea’s major conglomerates created complicated ownership structures to fuel their business growth. These arrangements have since become widely known as chaebols. They are family-run corporate entities that have erected complex ownership frameworks to ensure business expansion.
In the case of Samsung, the ownership structure is a complex web-like system of 80+ affiliate companies. The Lee family has the largest shares in the company’s largest affiliate company, Samsung Electronics. The Lee family has also retained control over the company through its affiliates in Samsung Life Insurance and Samsung Everland.
Lee Jae-yong, the son of the group’s founder, has been directing the group since his father’s heart attack in 2014. The younger Mr. Lee, who is a Harvard graduate, has vowed to overhaul the company’s opaque culture. But he has also been forced to restructure the group’s ownership structure.
The Lee family has also been the target of stock manipulation charges. A whistleblower revealed that Mr. Lee owned more Samsung stock than he had stated. He also paid millions in taxes on the stock, which was kept under fake names.
The Fair Trade Commission, which is led by Kim Sang-jo, has launched a review of the group’s circular shareholdings. The commission has ruled that it is illegal for affiliates of business groups with assets of five trillion won to establish circular shareholdings.
Samsung’s circular shareholdings have come under fire from foreign investors. They have been criticized for allowing the Lee family to wield enormous power over the company.
The Lee family is expected to inherit control of the company when the founder, Lee Kun-hee, passes away in 2020. Lee Jae-yong is expected to become the chairman.
Sustainabilty goals
During World Environment Day, Samsung Electronics unveiled its sustainability goals for the mobile communications industry. These goals focus on three key areas: waste management, recycling and resource circularity.
In addition, Samsung will reduce power and water consumption. It will enter into power purchase agreements, buy energy certificates and participate in green pricing programs. These actions will help the company achieve its Global Goals. Samsung will also strengthen its cooperation with other stakeholders.
Samsung will invest seven trillion KRW in environmental technologies through the end of 2030. It will also invest in startups that support green technologies.
In addition, Samsung plans to develop new ultra-low power memory chips that will reduce the annual power consumption of memory products by 2025. It will also work to recycle waste from its batteries by 2030.
Samsung has also created the Circular Economy Lab, which will conduct research on recycling and resource extraction. Its goal is to make the entire product lifecycle more sustainable.
Samsung will also promote upcycling of old mobile phones and other electronic devices. It will reuse smartphones for IoT devices, and develop a system for collecting used smartphones for other uses. The company will also work to collect and reuse e-waste globally. It plans to implement an upcycling program and expand its collection system to 180 countries by 2030.
Samsung’s goals also include reducing harmful airborne particulate matter and making products energy efficient. The company has plans to reduce its energy consumption by more than 30% by 2025. It will also increase its use of renewable energy by more than 39%.
Samsung also announced plans to reduce its use of plastic packaging. It will also work with industry peers to reduce their environmental impact.
Acquisitions
Earlier this year, Samsung acquired the US-based audio and automotive company Harman for $8 billion. This is one of the largest Samsung acquisitions in history.
Harman is a leading provider of connected car solutions for automobile manufacturers. Their solutions are present in more than 30 million vehicles, including Audi, Toyota, BMW, and Volkswagen. They also provide telematics, embedded entertainment, and safety systems. They are present in more than 65 percent of the market.
Samsung also acquired NewNet Communication Technologies in 2016. This company provides cutting-edge solutions to improve international communications. It has a customer base in more than 90 countries. Its services include telematics, messaging, telecom, and cloud computing.
Another acquisition was Viv Labs, which is an artificial intelligence platform. It offers cutting-edge technology for text-to-speech and voice-to-text applications. It also has an exceptional machine learning capability.
Samsung has also been linked to Swiss semiconductor company STMicroelectronics. It may also look to acquire companies in the Silicon Valley. The company is expected to acquire semiconductor firms in the logic chip and foundry sector.
Samsung is known for its strong marketing budget, which is double-digit billions a year. It also has a cash pile of more than 100 trillion won. It plans to use this money to fund its growth through acquisitions and mergers. It will also increase its shareholder outreach. It will return 50 percent of its free cash flow from 2021 to 2023.
Samsung is also rumored to be interested in AMD. It has extensive experience in chip design and could be interested in AMD’s patent portfolio.
Samsung also acquired a company that is involved in building software for IoT products. This tie-up may prove to be positive for the company. The company will integrate its software with Samsung’s smartphones and IoT products.
Future plans
Earlier this year, Samsung laid out its future plans for the year. The company revealed plans to increase investment in its core businesses while supporting robotics and other new technologies. The investment plan is expected to create tens of thousands of new jobs and spur 560,000 new jobs in related industries.
The company is also investing in the smart home ecosystem. It plans to enhance connectivity with advanced AI, voice recognition and a connecting platform. It will also be expanding its ecosystem of design partners and suppliers. It will also be introducing new services and improving its supplier support programs.
It also has a “Smart Factory” program to enhance the manufacturing capabilities of small and medium-sized companies. The company’s foundry lines in Korea will also be expanded.
The company is also investing in high-energy density batteries and solid state battery products. It has also developed 8nm RF, the next-generation wireless telecommunications technology, and will start mass producing 14nm RF later this year.
The company is also working to reduce the amount of waste produced by its manufacturing facilities. It plans to replace plastics used in the packaging of its products with eco-conscious solutions.
Samsung has also been making significant investments in biopharmaceuticals. It plans to increase its biosimilar pipeline to help it discover new growth engines. It also has plans to enter contract manufacturing of vaccines and gene therapy products.
The company also plans to increase investment in AI, robotics and other new technologies. It will also be expanding its venture incubation platform C-Lab. In the process, it hopes to attract new customers through its SAFE (Smart Appliances, Faster Electronics) ecosystem. It also has plans to enhance its global research and development centers.