Lee Jae-yong’s ‘Taylor Declaration’ surpasses the semiconductor success story of the ‘Tokyo Declaration’ 38 years ago

Samsung founder and late Chairman Hoam Lee Byung-chul. Source = Ho-Am Foundation

[이코노믹리뷰=박정훈 기자] “From now on, we also decided to make semiconductors, so please report it to the domestic media.”

On February 8, 1983, while on a business trip to Tokyo, Japan, the late Chairman Lee Byung-cheol, the founder of Samsung, called the JoongAng Ilbo Chairman Hong Jin-ki and told them. After that, Samsung made a large-scale investment in ‘Very High Density Integrated Circuit (VLSI)’, which was the state-of-the-art semiconductor technology at the time. surprise the

This is the ‘Tokyo Declaration’ by Chairman Lee Byung-cheol, who made ‘semiconductor’, which recorded 70 trillion won in sales and 18 trillion won in operating profit annually (as of 2020), as Samsung Electronics’ top flagship business.

“Let’s pioneer a future that no one has gone to”

On November 21, 2021 (local time), Samsung Electronics Vice Chairman Lee Jae-yong (005930) will visit Samsung Electronics’ semiconductor plant in Silicon Valley, California, USA. Vice Chairman Lee said to local employees, “It will be difficult, but let’s create a new Samsung together by pioneering a future that no one has been to.”

Three days later, on November 24, Samsung Electronics decided to invest $17 billion (about 20 trillion won) to build the second US foundry (semiconductor consignment production) plant in Taylor, Texas. This was the largest ever recorded by Samsung Electronics in a single business site. Samsung Electronics’ new challenge to write another success story in semiconductors began with the ‘Taylor Declaration’ by Vice Chairman Lee Jae-yong, just like the founder’s declaration 38 years ago.

A goal that seems far away

Samsung Electronics’ memory semiconductor, which started with ’64K DRAM’ about 30 years ago, ranks first in the world with a market share of 41.7%. This was the result that started with the Tokyo Declaration by Chairman Lee Byung-chul, continued with the will of Chairman Lee Kun-hee, and completed by Vice Chairman Lee Jae-yong. However, Samsung Electronics has a goal that has not yet been achieved. It is the world’s No. 1 in ‘the entire semiconductor area’. Although Samsung Electronics has recorded remarkable growth in semiconductors, there is still a long way to go to achieve its goal.

Although Samsung Electronics boasts a unique position in memory semiconductors, its position in system semiconductors is not large. A clear indication of this is Samsung Electronics’ share of the semiconductor market as of last year. Memory semiconductor recorded 41.7%, while system semiconductor recorded 2.2%. Considering that system semiconductors are the core of future advanced technologies such as 5G networks, artificial intelligence, autonomous driving technology, and metaverse, there is tremendous added value for Samsung Electronics.

​On November 23, 2021, Vice Chairman Lee Jae-yong met Google CEO Sundar Pichai (right) on a business trip to the United States.  Source: Samsung Electronics Vice Chairman Lee Jae-yong speaking at the Samsung Electronics System Semiconductor Vision Declaration Ceremony held on April 30, 2019.  Source = Samsung Electronics
​On November 23, 2021, Vice Chairman Lee Jae-yong met Google CEO Sundar Pichai (right) on a business trip to the United States. Source: Samsung Electronics Vice Chairman Lee Jae-yong speaking at the Samsung Electronics System Semiconductor Vision Declaration Ceremony held on April 30, 2019. Source = Samsung Electronics

In addition, in the ‘foundry’ (semiconductor consignment production), an industry that is in a very important position in the production of this system semiconductor, Samsung Electronics occupies a ‘second place’ position. In the global foundry market, Taiwanese semiconductor company TSMC occupies an almost monopoly position with 52.9% (as of the second quarter of 2021). During the same period, Samsung Electronics’ foundry share was 17.3%.

Accordingly, on April 24, 2019, Samsung Electronics announced the ‘Samsung Semiconductor Vision 2030’ with the goal of “to become the number one company in the semiconductor industry by investing about 133 trillion won in system semiconductors by 2030.” Vice Chairman Lee Jae-yong makes a decision to throw a certain number of wins here.

In August, Samsung Electronics announced that it would invest 240 trillion won in semiconductor, bio, and network businesses over the next three years. Of this 240 trillion won, it is known that Samsung Electronics plans to spend between 170 trillion won and 180 trillion won to strengthen its semiconductor competitiveness. It is an extra-large investment that adds at least 40 trillion won to the 133 trillion won of the 2030 Vision. Experts expect that most of the capital invested by Samsung Electronics in semiconductors will be concentrated in system semiconductors.

Samsung Electronics confirmed to invest in a new foundry line in Taylor City, Texas.  Texas Governor Greg Abbott (left) and Samsung Electronics Vice Chairman Kim Ki-nam.  Source = Samsung Electronics
Samsung Electronics confirmed to invest in a new foundry line in Taylor City, Texas. Texas Governor Greg Abbott (left) and Samsung Electronics Vice Chairman Kim Ki-nam. Source = Samsung Electronics

‘Completion’ of the global semiconductor production infrastructure

With the confirmation of the construction of a new factory in Taylor City, Samsung Electronics solved the final puzzle of global semiconductor production bases in Korea and abroad. On the 24th, Samsung Electronics made an official statement on the decision of selecting the city of Taylor as the site of the new foundry, saying, “The new semiconductor production line to be built in the city of Taylor will work together with the existing Pyeongtaek 3 line to achieve Samsung Electronics’ ‘System Semiconductor Vision 2030’. “With this line construction, Samsung Electronics’ global system semiconductor production system linking domestic business sites such as Giheung/Hwaseong and Pyeongtaek with overseas business sites such as Austin/Taylor will be strengthened, and a more rapid response to customer demands will be strengthened. Of course, it is expected to contribute to securing new customers.”

In the early 1980s, Chairman Lee Byung-cheol had to be ridiculed and ridiculed by Japanese electronics companies that dominated the global semiconductor industry at the time, saying, “Samsung will never be able to make high value-added semiconductors.” However, the vision of Chairman Lee, who saw the future that will be changed by technological innovation based on semiconductors, was not wrong, and Samsung Electronics has grown into a larger company than all Japanese electronics companies combined. In addition, Samsung Electronics ranks first in the world in the memory semiconductor field, where there was a gap of ‘at least 27 years’ with US and Japanese companies.

Vice Chairman Lee Jae-yong met Google CEO Sundar Pichai (right) on a business trip to the United States on November 23, 2021.  Source = Samsung Electronics
Vice Chairman Lee Jae-yong met Google CEO Sundar Pichai (right) on a business trip to the United States on November 23, 2021. Source = Samsung Electronics

38 years later, Vice Chairman Lee Jae-yong, grandson of Chairman Lee Byung-cheol, has been drawing a new blueprint for Samsung Electronics’ semiconductors on a business trip to the United States. The world’s attention is focused on whether Vice Chairman Lee Jae-yong’s ‘Taylor Declaration’ of “Let’s go on a road not taken” can write a new semiconductor success story that surpasses the ‘Tokyo Declaration’ of his grandfather Lee Byung-cheol.

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