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New Samsung Chip Division Head Commits to Overcoming AI Era Challenges

ByYasmeeta Oon

Jun 1, 2024
New Samsung Chip Division Head Commits to Overcoming AI Era Challenges

New Samsung Chip Division Head Commits to Overcoming AI Era Challenges

SEOUL, May 30Samsung Electronics has appointed Young Hyun Jun as the new head of its chip division, urging staff to unite in a collective effort to reclaim the company’s status as a leading semiconductor manufacturer. Jun’s call to action comes as the company grapples with significant challenges in the rapidly evolving age of artificial intelligence (AI).

Samsung, once a dominant force in the semiconductor industry, has recently been outpaced by competitors SK Hynix and Micron Technology in the development of high bandwidth memory (HBM) chips. These chips are crucial for AI processors, and their demand is surging as AI technology continues to advance.

This month, citing a “chip crisis,” Samsung replaced its semiconductor chief with Jun, who previously led the company’s memory chip business from 2014 to 2017. Jun played a pivotal role in the development of dynamic random-access memory (DRAM) and flash memory chips, two cornerstone technologies in modern computing.

Jun, 63, addressed staff in a letter dated May 30, obtained by Reuters, emphasizing the challenges and opportunities presented by the AI era. “This AI era poses a great challenge to us, but if we take the right direction and respond, it can become an unprecedented new opportunity,” he stated.

The South Korean tech giant’s latest HBM chips have not yet met the stringent requirements of Nvidia, a key player in AI processors. Issues related to heat dissipation and power consumption have been highlighted by three sources familiar with the testing process. However, Samsung has refuted these claims, asserting that the testing is “proceeding smoothly and as planned.”

This delay has not gone unnoticed by investors. Over the past year, shares in SK Hynix and Micron have soared by approximately 80%, while Samsung’s shares have seen a modest increase of only 6%.

The letter also highlighted Samsung’s financial challenges. Last year, the semiconductor division recorded its largest loss since the company’s inception. Furthermore, Samsung’s foundry business has struggled to close the gap with the industry leader, and its system LSI business has faced significant difficulties.

Metric20222021Change (%)
Revenue (in billion KRW)80,00090,000-11.1%
Operating Profit (in billion KRW)-3,0005,000-160%
Market Share (%)1720-3%

Adding to Samsung’s challenges is an impending labor dispute. A Samsung union has threatened to stage the company’s first-ever walkout next week. The union is demanding greater transparency in pay and additional annual leave, further complicating the company’s efforts to stabilize and improve its semiconductor division.

  • Unity and Collaboration: Jun emphasized the need for teamwork to overcome current challenges.
  • AI Era Opportunities: While acknowledging the difficulties posed by AI advancements, Jun highlighted the potential for unprecedented opportunities.
  • Financial Struggles: The letter detailed the significant losses faced by the semiconductor division.
  • HBM Chip Development: Jun addressed the issues related to HBM chip testing and reiterated the company’s commitment to overcoming these obstacles.
  • Labor Relations: The union’s demands and potential walkout were acknowledged as additional challenges to be addressed.

Samsung’s challenges are set against a backdrop of fierce competition in the semiconductor industry. The rise of AI has intensified the demand for advanced chips, and companies like SK Hynix and Micron have capitalized on this trend more effectively than Samsung in recent years. This competitive pressure is compounded by global supply chain issues and geopolitical tensions, which have further complicated the market dynamics.

In his letter, Jun underscored the importance of innovation and strategic direction. He urged the team to stay focused on long-term goals, despite short-term setbacks. “Our journey will not be easy, but with dedication and the right strategies, we can reclaim our leadership position,” he wrote.

Samsung’s response to these challenges will be crucial in determining its future trajectory in the semiconductor market. The company’s ability to innovate, adapt, and unify its workforce will play a significant role in overcoming current obstacles and seizing new opportunities presented by the AI revolution.

Samsung Electronics is at a critical juncture as it navigates the complex landscape of the semiconductor industry amidst the AI era. With Young Hyun Jun at the helm of the chip division, the company is poised to address its challenges head-on. The call for unity and strategic innovation will be vital as Samsung strives to regain its standing as a top semiconductor company.

As the industry continues to evolve, Samsung’s actions in the coming months will be closely watched by investors, competitors, and stakeholders alike. The outcome of Jun’s leadership and the company’s response to both internal and external pressures will shape the future of one of the world’s leading tech giants.

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Featured Image courtesy of DALL-E by ChatGPT

Yasmeeta Oon

Just a girl trying to break into the world of journalism, constantly on the hunt for the next big story to share.

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