Samsung holds emergency CEO meeting on technology, risk

Chief executives of Samsung Group’s technology units, led by Samsung Electronics Co., held an emergency meeting on Monday to discuss new technology development and future growth drivers, while reviewing their global market conditions and business risks.

The unscheduled gathering that began 7:30 a.m. local time came two days after Samsung Electronics Co. Vice Chairman and de facto leader Jay Y. Lee returned from his 12-day business trip to Europe. The company's share price also tumbled to its lowest point in one and a half years on Monday.

“In whatever situation, technology comes first, second and third in our list of priorities,” he told reporters, when asked about his 12-day business trip to Europe. 

“Samsung is tasked with recruiting qualified workers and becoming a flexible organization to adapt to predictable changes,” Lee told reporters.

Lee's remarks fanned market speculation that the world's largest memory chipmaker is accelerating its efforts to revamp its management strategy and recruit talent.

The Monday meeting of over eight hours was convened by Samsung Electronics Vice Chairman and CEO Han Jong-hee. 

Han and Samsung Electronics’ device solution division CEO Kyung Kye-hyun chaired the meeting attended by 24 higher-ranking executives, including CEOs of Samsung SDI Co., Samsung SDS Co., Samsung Display Co. and Samsung Electro-Mechanics Co.

During the marathon talks, they also addressed rising inflation, supply chain disruptions and falling demand for electronic gadgets just ahead of Samsung Electronics' global strategy meetings to be held June 21-28.

At the meetings, new technology development will likely be the top agenda, based on Lee’s mantra that technology is the way out of the crisis, according to a Samsung Electronics official.

MEANINGFUL VISIT TO ASML

Samsung Electronics' Lee noted on Saturday that his recent visit to the Netherlands-based ASML Holding NV drove home the importance of technology amid growing uncertainty and disruption triggered by the Russia-Ukraine war.

Wrapping up the June 7-18 business trip to Europe, Lee picked his tour of the world’s sole producer of extreme ultraviolet light (EUV) scanners, key in producing advanced chips, as the most meaningful.

“The visit to ASML and its semiconductor lab gave me a glimpse into how the chip technology of the next and subsequent generations will develop," he told reporters at the Gimpo Airport in Seoul.

The Dutch company was the first stop for Lee’s business trip, about two weeks after the parent Samsung Group, unveiled its largest-ever, five-year investment plan of 450 trillion won ($355 billion). To execute the massive investment, Lee told The Korea Economic Daily last month that Samsung will take a do-or-die attitude.

As competition is intensifying to produce microsmaller chips, EUV scanners are in higher demand, though their supply is limited to about 40 units per year since it takes two years to produce one scanner.

The lithography machine can draw elaborate and detailed patterns on semiconductor wafers, while simplifying the chip manufacturing process. The machine is essential to produce microchips, or below the 10 nm process node.

DOWNWARD TREND IN SAMSUNG SHARES

Shares of Samsung Electronics, South Korea’s largest stock by market cap, have been on a downward spiral since late May to hit their weakest level in one and a half years.

On Monday, the stock trimmed its losses to close down 1.84% to 58,700 won after briefly falling to as low as 58,100 won, its lowest point since late October 2020.

Early this month, Samsung executed an unexpected personnel reshuffle, including the dismissal of 10 higher-ranking executives in the semiconductor division. Those executives include the flash chip development chief and the foundry business head.

They were held accountable for a lower-than-expected yield of its new mobile application processor, the so-called brain of a smartphone. The low yield forced Samsung to turn to Qualcomm’s Snapdragon processors for the Galaxy S22 model, except for the handsets shipped to Europe.

The mishap pushed Samsung to focus on upgrading its chip design and process systems in the second half of this year, according to industry watchers.

Its global market share in the smartphone, the company's cash cow, has little changed at 21% since 2016. Samsung also has not been faring well in fabless system-on-a-chip and foundry businesses, picked by Samsung's new growth areas.

(Updated with Samsung's emergency CEO meeting and share price.)

Write to Ji-Eun Jeong and Ik-Hwan Kim at jeong@hankyung.com
Yeonhee Kim edited this article.