Samsung Electronics, which led Korea's semiconductor industry, is struggling in the rapidly changing semiconductor market driven by the artificial intelligence (AI) boom. In the second quarter of this year, the company recorded a 'performance shock' with poor results in its high bandwidth memory (HBM) business and large-scale losses in its foundry business. ChosunBiz met with master's and doctoral level engineers who worked in the semiconductor (DS) institutional sector at Samsung Electronics to explore the structural issues facing Samsung semiconductors.[Editor’s note]
A (43), who was in charge of the DRAM process at Samsung Electronics' memory division for 10 years, accepted a job offer from SK hynix after much contemplation in 2023. The organizational culture at SK hynix, which he expected to be similar to that of Samsung Electronics, was quite different. The biggest difference was the liberation from 'reports'. During his time at Samsung Electronics, even when defects in processes or designs were discovered in joint projects with other departments, it was common to minimize or distort the facts in reporting to avoid disadvantages for his department. This is because when problems arose, the practice of 'passing the buck' began.
B (30s), who graduated from a well-known engineering school in Korea and accumulated eight years of experience at Samsung Electronics, felt skeptical about the organizational culture that prioritized 'accountability' over 'challenges'. B believed that 'all Korean corporations are the same', but after joining SK hynix, he experienced a different corporate culture. At SK hynix, numerous development organizations fiercely compete, and based on the ideas proposed here, management adopts various options through a bottom-up decision-making process. In contrast, Samsung Electronics was busy identifying accountability before determining the technological direction. He said, 'In an organization where the phrase 'If this fails, will you take responsibility?' comes first, no one can attempt new challenges.'
With the status of Samsung Electronics' semiconductors, once called 'super-gap', shaking, a continuous flow of engineers like A and B heading to SK hynix exhausted by the rigid organizational culture is occurring. Since the 1990s, Samsung Electronics' memory division has played the role of the heart of Samsung semiconductors, leading the market with technological prowess. After the mobile era began in the 2010s, it led the industry with technology ahead of competitors by 1 to 2 years. However, Samsung Electronics is currently lagging behind competitors not only in AI memory such as high bandwidth memory (HBM) but also in DRAM and NAND flash, in which it had strengths.
Industry analysts suggest that the weakening of technological leadership is leading to the departure of key engineers. C (51), who was in charge of DRAM miniaturization design at Samsung Electronics for nearly 20 years, transferred to SK hynix two years ago and is now leading the development of sixth-generation (1C) DRAM at 10 nanometers. He noted, 'Many former Samsung Electronics employees have moved to SK hynix since 4 to 5 years ago, and the pace has increased recently,' adding that 'this phenomenon is not just about salary issues but also due to a rigid research and development environment and personnel systems.'
◇ Differences in organizational culture revealed during the HBM development process
The common opinion among those who left Samsung Electronics is that, in the absence of progressive internal competition, a culture has become entrenched where accountability is attached as a label for challenges.
During the HBM development process, which became a turning point in the AI memory competition, the contrasting research and development (R&D) cultures of Samsung Electronics and SK hynix were revealed. B stated, 'At SK hynix, multiple teams are fiercely competing over HBM stacking technology, but at Samsung Electronics, if a new idea fails, the person who proposed it has to take full responsibility.'
He explained, 'For instance, within SK hynix’s packaging team, the MR-MUF (a process where chips are stacked and attached all at once) development team and the hybrid bonding (a process that manufactures chips without using bumps) team fiercely compete with their respective technologies,' adding that 'decisions on which process to adopt are made based on objective data regarding performance and expenses of each developed process.'
B explained that the competitive culture has driven technological breakthroughs. He said, 'Initially, there was a prevalent view that the MR-MUF process had limitations on more than 16 layers, but through internal competition, technology was developed to significantly reduce the spacing between chips, maximizing process efficiency,' stating further, 'As a result, I understand that it has developed internally to a technology that can be utilized up to 20 layers.' He added, 'This is also similar to TSMC's method of maximizing the utilization of existing technologies to enhance cost efficiency.'
In contrast, Samsung Electronics' R&D culture was completely opposite. B said, 'When an employee proposes a new idea at Samsung Electronics, the first question is, 'Can it be done? If not, will you take responsibility?' This makes challenges difficult.' He further remarked, 'If you're told to bear the responsibility when an idea fails, who would dare to attempt anything?'
Recently, the phenomenon of talent exodus seems to be spreading from memory to the foundry division. Since sixth-generation HBM, known as HBM4, requires advanced foundry processes positioned below the memory die (the brain role), SK hynix is securing personnel with a high understanding of foundry processes. Since last year, there have been cases of 2 to 3 team members from Samsung Electronics' foundry division’s FinFET process transferring to SK hynix.
Recently, D (43), who transferred from Samsung Electronics' foundry division to SK hynix, stated that the uncertain future of the business and internal disparities triggered his move. He noted, 'with ongoing losses, low utilization rates, and even the possibility of separation being mentioned, concerns about the sustainability of the business have increased,' adding 'the sense of deprivation due to the gap in treatment and promotion opportunities compared to the memory division cannot be overlooked.'
◇ “External talents can shine at SK hynix”
D (42), a senior researcher who worked at Samsung Electronics’ semiconductor research institute for over 15 years before moving to SK hynix, stated that more opportunities should be given to external talents. He mentioned, 'The memory division of Samsung Electronics has a strong cultural bias towards bloodline purity, as it is difficult for anyone who is not a Samsung alumnus to rise to key positions, except for a very few.' In contrast, he explained, 'What surprised me when I came to SK hynix was that not only Samsung alumni but also those from relatively lesser-known software companies are recognized for their performance in key positions.'
There are also evaluations that SK hynix's open culture has led to actual results. The NAND flash business, which was once a 'sore spot' for SK hynix, is a prime example. Until the 2010s, it was evaluated as the most lagging in NAND technology among major memory semiconductor companies, but starting in 2017, as they began recruit 'heavyweight' engineers from Samsung, they started strengthening their technological competitiveness. As a result, they have recently launched products with performance surpassing Samsung Electronics and Micron in the high value-added product market, improving profitability.
The vice president Choi Jeong-dal, who led the development of the world's first 321-layer NAND at SK hynix, is someone who has even received the 'Proud Samsungian' award. Prior to that, the former president Jeong Tae-sung, who led the NAND business at SK hynix, was also a 'Samsung man' who had been with Samsung Electronics for over 20 years. The unprecedented appointment of a former Samsung executive to lead a competitor's division has played a significant role in SK hynix's technological leap.
Experts diagnosed that improving the system is essential for Samsung semiconductors to escape crisis and make a comeback. Kim Yong-jin, a professor at Sogang University’s Business School, stated, 'Samsung has long had a strong character as a 'managed organization' where human resource and financial divisions wield significant power,' adding, 'when an organization lacking technological expertise makes decisions based solely on financial criteria, it inevitably leads to a decline in business competitiveness.' He further noted, 'Without a decisive resolution from top management to change this system, it will be difficult to guarantee the future of Samsung semiconductors.'