Samsung Electronics, which led Korea's semiconductor industry, is struggling in the rapidly changing semiconductor market driven by the artificial intelligence (AI) wave. In the second quarter of this year, the company recorded an 'earnings shock' due to poor performance in its high bandwidth memory (HBM) business and massive losses in its foundry business. ChosunBiz met with Ph.D. engineers who worked in the semiconductor institutional sector at Samsung Electronics to examine the structural problems of Samsung's semiconductors. [Editor’s note]
A (38), who received his master's and doctorate in semiconductor thermal control from a prestigious university in the United States, joined Samsung Electronics in 2021 after turning down calls from Silicon Valley companies. He was proud to be called the best expert in controlling heat, which is known as the 'enemy of semiconductors.' However, in the three years after joining Samsung Electronics, he never had the opportunity to demonstrate his expertise. This was due to being assigned to a role unrelated to his background. The role of analyzing thermal data did not exist in the department he was assigned to, and despite several requests for a department transfer, his pleas were not accepted. Ultimately, he switched to a global electronic design automation (EDA) company that develops simulation software essential for semiconductor chip design.
B (40), an expert in advanced packaging technology, joined Samsung Electronics’ foundry institutional sector after graduating from a renowned U.S. university and working as a researcher. The team leader who welcomed B was said to have a glamorous background, being from the 'Intel Packaging Division.' However, upon closer examination, it turned out that he was from a software company acquired by Intel. B's team leader had no understanding of next-generation packaging projects, and the projects assigned to the team were not functioning properly. This was the result of the personnel department hiring blindly, trusting only the name 'Intel.' B had to face the awkward reality of working under a leader who was incapable of technical discussions.
A continuous exodus of key engineers leaving Samsung Electronics, which represents Korea's semiconductor industry, is underway. The number of resignations among employees at Samsung Electronics rose from 6,189 in 2022 to 6,459 last year. In particular, there is a growing sense of crisis regarding the departure of Ph.D. talents from the semiconductor (DS) institutional sector, according to communications inside and outside Samsung Electronics.
According to a report by ChosunBiz on the 10th, many former Samsung Electronics engineers have pointed to issues with personnel decisions that do not consider individual expertise, as well as the conservative and out-of-touch management's top-down administration. Most of the former Samsung semiconductor engineers met by ChosunBiz left the company after 2017. Following the retirement of former Chairman Kwon Oh-hyun, the Business Support Task Force strengthened its authority over personnel and finance related to the semiconductor institutional sector, leading to a loss of independence and expertise that Samsung's semiconductors had maintained for a long time. The analysis suggests that the management of semiconductors is in crisis, as even research and development (R&D) and facility investments must now undergo exhaustive reviews.
Concerns are growing that the outflow of key talents in the system semiconductor business, which is said to be driven by 'a few geniuses moving the aircraft carrier,' could signal a loss of future competitiveness. There were many voices expressing worry about the existence of the system LSI and foundry institutional sectors, which have poorer working conditions and treatment compared to the memory institutional sector. In the past few years, both units have suffered poor performance and faced criticism both inside and outside the company, resulting in a significant decline in internal morale.
◇ “The head of the team lacks project understanding… R&D continuity cannot be maintained”
C (38), who moved to SK hynix last year, majored in materials science at KAIST and was responsible for advanced processes such as FinFET in Samsung Electronics’ foundry institutional sector. He stated, “In the past, the problem was the complete misunderstanding of the foundry business by executives who came from the memory institutional sector, but recently, it has become a bigger problem that leaders from outside do not understand the entire process except for the process they are responsible for.”
C said, “The foundry process relies heavily on the synergy between numerous processes, and if the leader cannot see the whole picture, it delays problem-solving and the establishment of processes enhancement strategies,” adding, “In the end, the burden falls on the existing workforce.” He continued, “The difficult environment that makes it hard to demonstrate expertise, combined with the persistent treatment gap and lack of promotion opportunities compared to the memory institutional sector, left me with no choice but to leave the company.”
The issue of leadership is pointed out as a long-standing ailment in Samsung's semiconductors. D, a former chief researcher at Samsung Electronics and currently a professor at a private university in Seoul, noted, “The organizational culture has not changed from 15 years ago to now.” He said, “It takes one year for an executive from the memory institutional sector to understand the business and two years to embark on joint projects. The cycle of transferring to another institutional sector or leaving the company has been repeating for over 10 years,” stating that “the sustainability, which is key to R&D, cannot be maintained.” He added, “In the past, there wasn't even challenging R&D, but rather a culture that discouraged any trouble, and that culture still hasn’t changed, which is frustrating.”
A former engineer who experienced recruitment and internal organization at Samsung semiconductors pointed out the overall issues with the personnel system. A semiconductor expert who has a master's and doctorate in mechanical engineering from Seoul National University and has worked in departments related to packaging at Samsung Electronics, now with a global EDA corporation, stated, “Incompetent team leaders do not properly evaluate talented individuals to protect their positions,” adding, “The personnel organization is solely focused on the KPI (Key Performance Indicator) of ‘which background should we select from,’ without deep contemplation of what kind of talent is needed.”
◇ Disappointment in report culture and global semiconductor understanding
It's also noted that a culture that does not respect the personal expertise and achievements of engineers is encroaching on the entire organization’s innovation drive. Former engineers commonly assess that they have lost the 'speed' and 'flexibility' that are key in the AI era.
E, who earned his master’s and doctorate in electronic engineering in the U.S., worked as a systems semiconductor engineer at Samsung Electronics before starting a startup. He stated, “To create products suitable for the AI era, speed and focus are crucial, but innovation is impossible with the top-down decision-making structure of large corporations like Samsung.” He added, “Projects attempting new architectures are often delayed or rejected due to complex reporting lines and financial reviews,” stating, “While Samsung excels in manufacturing, that success model does not apply in the AI era.”
There were criticisms that a conservative choice only seeking 'stability' has hindered growth. An executive from an AI semiconductor corporation, who worked nearly 20 years in the Samsung Electronics system LSI institutional sector developing design assets (IP), remarked, “When Qualcomm expands its business from mobile application processors (AP) accumulated capabilities into automotive and Internet of Things (IoT), Samsung has relegated itself to a company that only makes mobile APs with system LSI.” He stated, “Despite having sufficient capabilities like proprietary modem chip technology, opportunities to expand into diverse fields were missed due to a lack of leadership and conservative business operations.”
He stated, “Semiconductor IP is an advanced project that predicts 4 to 5 years ahead in the semiconductor market through the company’s creativity and development capability,” explaining that “many engineers were eager to enhance Samsung’s capabilities in the systems semiconductor business through in-house IP development. Highly skilled engineers proposed various projects and even filed for patents, yet the management only insisted, ‘Present reports that we can understand.’” He continued, “The archaic report culture and lack of understanding of the global semiconductor industry have caused many talented individuals to leave the company, some of whom are now employed at ARM or Broadcom, receiving high salaries. Knowing these success stories, would the engineers who remain in the company want to stay?”
Professor Emeritus Kim Gi-chan of the Business Administration Department at Catholic University noted, “There are many talents within Samsung Electronics, but the system for empowering them to be utilized in the right places has disappeared.” He remarked, “Under the system of former Chairman Kwon Oh-hyun, who was in the heyday of Samsung semiconductors, a firm stance of ‘reward performance with money and recognize ability with promotions’ was in effect, but now, traces of this can no longer be found. A comprehensive examination is necessary, yet the internally fully bureaucratized 'Samsung civil servant' management turns a blind eye to this issue.”