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- LG's Koo Kwang-mo Faces China's 'Cost-Effectiveness Threat': Focusing on HVAC, XR, and AI for Growth
- In 2024, as LG Group Chairman Koo Kwang-mo marks his sixth year in office, China's aggressive price competitiveness in sectors such as batteries, OLEDs, and home appliances is rapidly closing in on LG.
After boldly deciding to "select and focus" by exiting markets like smartphones and solar power, Chairman Koo has been working to strengthen LG's competitiveness in new areas such as heating, ventilation, and air conditioning (HVAC), artificial intelligence (AI) home systems, OLED, and extended reality (XR) to fend off the rising threat from China.
On September 9, industry insiders analyzed that the heightened competitiveness of Chinese home appliance companies now poses a serious challenge to South Korea’s home appliance industry.
At a press conference at IFA 2024, Europe’s largest home appliance exhibition held in Berlin, Germany, LG Electronics CEO Cho Ju-wan stated, “Chinese home appliance companies have significantly improved in terms of quality, and we now need to keep an eye on them.”
In fact, China’s leading home appliance company Midea recorded KRW 70 trillion (US$50.5 billion) in sales in 2023, an 8.1% increase from 2022, claiming the top spot in global home appliance sales. In comparison, LG Electronics' 2023 sales dropped by 2.7% to KRW 44.3 trillion (US$32 billion).
While LG Electronics' home appliance division has seen stagnant sales, Chinese companies have taken over the mid-to-low-end home appliance market.
The display industry is also facing tough competition.
According to market research firm Omnia, in the first quarter of 2024, China overtook Korea for the first time in the global OLED panel market, capturing a 49.7% share, compared to Korea's 49%. This is a dramatic shift from the first quarter of last year when Korea held a 62.3% share and China 36.6%.
Until last year, LG Display, along with Samsung Display, dominated the global OLED market. However, due to China’s aggressive low-cost strategies, their global market share has been declining.
Although LG Display still leads the large OLED TV market, Chinese companies are using their domestic products for smartphone OLEDs, causing a continued drop in LG’s global market share.
The battery sector is facing a similar situation.
As of July this year, Korea's three battery companies held a combined global market share of 46.5%, excluding China, a 2.1 percentage point drop from the same period last year. In contrast, Chinese battery manufacturers increased their share by 2.3 percentage points to 53.7%.
LG Energy Solution’s market share decreased by 1.4 percentage points year-on-year to 26.2%. While battery usage increased by 6.9% compared to last year, it still fell short of China’s CATL, which saw an 11% increase, securing second place in market share.
Chairman Koo is expanding investments in new business areas such as HVAC, AI home systems, OLED, and XR.
He is seeking new growth opportunities in areas where China’s technological capabilities have yet to catch up.
On September 9, LG Electronics announced its acquisition of a stake in Mo-Sys Engineering, a UK-based virtual production solutions and camera robotics company.
Previously, LG had limited its role in the XR market to supplying microLED and LED panels through LG Display. However, with this acquisition, it is making a serious push into the XR market.
Chairman Koo is also focusing on the HVAC business, which LG Electronics is pursuing as a future growth driver under the global trends of AI and eco-friendliness.
On September 9, LG Electronics announced a partnership with Dongwon Group to collaborate on the construction of high-efficiency HVAC solutions. Dongwon Group has committed to investing KRW 40 billion (US$28.8 million) by 2030.
On September 1, LG also held a consortium agreement ceremony with China’s Harbin Institute of Technology for the "China Consortium for Advanced Heat Pump Research (CCAHR)." This marks the establishment of a consortium to develop next-generation heat pump core technologies in Asia, following similar efforts in North America and Europe.
The AI home business is also progressing steadily.
An AI home system connects home appliances to a single hub that uses AI to automatically analyze and provide personalized services for users—a next-generation home appliance system.
Although the technology is not yet fully developed, LG Electronics, alongside Samsung Electronics, is leading the world in AI home technology. On September 8, Ryu Jae-chul, head of LG Electronics’ Home Appliance & Air Solutions (H&A) division, stated at IFA 2024, "We will open the AI home era within this year."
In July, LG Electronics acquired the Dutch IoT company 'At Home' for KRW 85 billion (US$61.3 million), and recently unveiled 'LG ThinQ On,' the core of its AI home system. ThinQ On connects home appliances and IoT devices 24/7, keeping them in optimal condition.
LG is also pushing hard to develop next-generation OLED technology, especially in automotive OLED displays, where it is recognized as the leader.
According to market research firm Omdia, LG Display ranked first with a 27.7% market share in the global premium automotive display market in 2023. In 2019, LG Display became the first in the industry to mass-produce plastic OLED (P-OLED) for vehicles, and it also developed ATO, an OLED using a glass substrate.
In smartphone OLED technology, LG has secured "two-stack tandem" technology, which offers higher brightness and energy efficiency, and supplies OLED panels to Apple. Although China’s BOE is rapidly improving its technological capabilities, there is still a significant technological gap, according to industry experts.
Chairman Koo is pursuing both qualitative and quantitative growth for LG Group in the long term.
During a visit to LG’s North American business sites in June this year, Chairman Koo encouraged LG employees, saying, "Have confidence and pride. Let’s make big steps in this long race for sustainable growth by embracing challenges and leaps forward."
#LG #KooKwangmo #ChinaThreat #HVAC #OLED #XR #AIHome #LGDisplay #BatteryMarket #HomeAppliance #SustainableGrowth
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- Samsung Electronics: End of the "Lee Kun-hee Era" Growth? Lee Jae-yong Seeks New Breakthroughs
- Industry experts suggest that Samsung, led by Chairman Lee Jae-yong, must swiftly identify new growth businesses and undergo business transformation to recreate the explosive growth witnessed during the era of the late Chairman Lee Kun-hee.
Samsung's key businesses, such as memory semiconductors and smartphones, which were elevated to global leadership under Lee Kun-hee, no longer demonstrate the same competitiveness and growth potential. Moreover, the rapid rise of Chinese manufacturing has intensified competition across Samsung's major business segments, raising concerns about declining profitability.
Chairman Lee is expected to not only explore new growth drivers in areas like artificial intelligence (AI), semiconductor foundry, and robotics, but also to establish an efficient operational system for the much larger Samsung Electronics of today compared to the past.
According to industry reports, from 2014, when Lee effectively took over as head of Samsung, to 2024, Samsung Electronics' market capitalization has grown by approximately 2.2 times, and its sales by around 1.5 times (based on 2024 performance forecasts).
In 2014, Samsung Electronics recorded an operating profit of around KRW 25 trillion (US$ 18.0 billion). This figure nearly doubled to KRW 51 trillion (US$ 36.8 billion) by 2021. However, in 2023, operating profit dropped to KRW 6 trillion (US$ 4.3 billion), with expectations for 2024 reaching approximately KRW 45 trillion (US$ 32.5 billion).
This marks a stark contrast to the period under Lee Kun-hee, when Samsung Electronics experienced explosive growth. During his 27-year leadership from 1987 to 2014, the company’s market capitalization increased 348 times, sales grew 34 times, and operating profit surged 125 times. Even during the 10 years between 2003 and 2013, Samsung's sales and operating profit grew fivefold, significantly outpacing the current decade's growth rate.
The lack of growth in recent years is attributed to weakened competitiveness in key sectors such as semiconductors, smartphones, displays, and consumer electronics.
Samsung Electronics, once boasting a significant lead in memory semiconductors, has recently ceded some leadership to SK Hynix in areas like high-bandwidth memory (HBM) and server DDR5, failing to fully capitalize on the AI semiconductor boom.
In smartphones, the gap with Apple in the premium market has widened, while Chinese manufacturers are fiercely challenging Samsung’s mid- and low-end models and foldable phones, placing Samsung in a difficult situation.
Some analysts predict that memory semiconductors and smartphones, which led Samsung’s quantum leap during Lee Kun-hee’s tenure, may be limited to single-digit growth rates in the future.
As a result, it has become imperative for Chairman Lee Jae-yong to find new growth drivers for his ‘New Samsung’ to replicate past growth.
Lee Jae-yong is exploring breakthroughs in areas such as AI, foundry, and robotics.
The AI boom is not only driving demand for Samsung's semiconductors but is also emerging as a key tool to overcome growth stagnation in smartphones and consumer electronics.
AI implemented directly on devices, known as "on-device AI," can help consumers maximize work efficiency or enjoy leisure in new ways. This could significantly expand previously small business models, such as subscription services.
In July this year, Samsung Electronics acquired the British startup Oxford Semantic Technologies, which holds knowledge graph technology, to integrate data and enable more personalized AI experiences. Knowledge graph technology connects related information in the form of linked graphs.
The foundry business is another sector Chairman Lee has pinpointed as Samsung's new growth engine.
Unlike the cyclical nature of the memory semiconductor business, the foundry business, which operates on a contract basis, is less sensitive to economic cycles and is considered to have both higher profitability and growth potential. For instance, during the semiconductor boom in 2022, Samsung’s memory semiconductor operating profit margin was about 30%, while Taiwan’s TSMC, a leading foundry company, achieved a profit margin of 52%.
As a latecomer in the foundry business, Samsung has faced difficulties, reporting operating losses in the foundry division for the past two years. However, if the company can overcome technological hurdles and stabilize the business, there is optimism that the foundry division could generate more profit than the memory semiconductor division within the next decade.
Samsung is also expected to see visible achievements in the robotics sector.
The company has secured a call option to acquire a 59.99% stake in Rainbow Robotics, a robotics venture, and is examining domestic and foreign companies with competitive robotics technology.
Samsung is reportedly considering deploying collaborative dual-arm robots from Rainbow Robotics in its semiconductor production lines. Additionally, Samsung is expected to launch its wearable robot "Botfit," which aids users with mobility issues, as early as October this year.
Chairman Lee Jae-yong inspects the construction site of the next-generation semiconductor R&D complex at the Giheung Campus on October 19, 2023.
Chairman Lee is also expected to establish a system that allows for more efficient management of the much larger Samsung Electronics compared to the past.
In the past, charismatic leadership from Lee Kun-hee, supported by Samsung's Future Strategy Office, handled most of the company’s major issues. This centralized decision-making system was praised for allocating the company’s limited resources optimally and achieving the best results.
However, given Samsung's current management structure and internal and external business environment, it is difficult to replicate such leadership today.
Therefore, Chairman Lee is reportedly pursuing decentralization by granting significant decision-making authority to professional managers in each business division while directly overseeing important decisions such as future business direction, major mergers and acquisitions (M&A), and capital allocation.
Industry experts note that while Chairman Lee may lack the charisma of his predecessor, he excels in building relationships with global leaders and making informed decisions, a skill on par with the former chairman.
For example, Chairman Lee’s acquisition of Harman in 2017, initially met with skepticism, is now regarded as a highly successful "big deal."
An industry insider commented, "As a company grows larger, its growth rate naturally slows, and this is a challenge Chairman Lee Jae-yong must solve. The DNA that led to victories in the semiconductor industry in 1983 and the smartphone industry in 2009 likely still remains within Samsung."
Keywords:
#Samsung #LeeJaeYong #AI #foundry #robotics #semiconductors #Harman #smartphones #growthstrategy #businessinnovation
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- Kim Beom-soo’s Legal Risks and Labor Disputes, Kakao’s Reform Amid Internal and External Struggles
- Nearly a year has passed since Kakao, a leading information technology (IT) company in South Korea, became embroiled in legal risks. With the recent arrest of its founder, these risks have reached a peak, and tensions between management and labor have further complicated Kakao’s attempts at corporate renewal.
As of August 6, according to reports from the IT industry, internal discord within Kakao is deepening, driven by the founder’s legal troubles and ongoing labor-management conflicts.
Since October 2022, Kakao has been dealing with allegations of market manipulation related to its acquisition of SM Entertainment, which brought legal issues to the forefront for its top executives. While the company has been pushing for aggressive reforms and restructuring, internal and external disagreements over the direction of these reforms have persisted.
Internally, labor-management conflicts over these reforms have escalated. On August 4, the Kakao branch of the National Chemical Fiber Food Industry Union (Kakao Union) announced that it had sent a notice of failed negotiations to the company on July 29 and subsequently applied for dispute mediation with the Gyeonggi Regional Labor Relations Commission.
The union claimed in its statement that while Kakao has been actively pursuing management reforms for about a year, its demands were ignored. On August 23, the union also called for an internal audit into allegations of embezzlement and breach of trust involving executives tied to Kakao Entertainment’s acquisition of a drama production company.
Specifically, the union demanded the termination of advisory contracts and the dismissal of Kim Seong-su, former co-CEO of Kakao Entertainment, and Lee Joon-ho, former head of Investment Strategy. They also called for the cancellation of advisory contracts for former Kakao Pay CEO Ryu Young-jun and former Kakao Enterprise CEO Baek Sang-yeop.
In March of this year, the union had criticized the company's decision to appoint new CEOs for Kakao Mobility and Kakao Entertainment without adequately addressing ongoing legal issues.
The breakdown in negotiations between Kakao’s labor union and management marks the first such incident since the union’s establishment in October 2018.
Kakao union leader Seo Seung-wook commented, "Negotiations have dragged on for more than 10 months due to management’s delays and failure to submit agenda items. We’ve declared the breakdown and will explore all means, including collective action, to push for reforms."
In response, Kakao expressed regret over the situation and stated that it would continue to communicate with the union.
Industry insiders suggest that maintaining internal cohesion and preventing workforce departures will be crucial to avoiding further disruption.
One industry source noted, "Kakao's internal atmosphere has worsened significantly as major issues have repeatedly surfaced over the past few years."
Since October 2022, Kakao has been emphasizing management reforms to address its legal risks. In connection with the allegations of market manipulation, the Financial Supervisory Service raided founder Kim Beom-soo's office on August 10, 2023. On October 19, 2023, the prosecution arrested Bae Jae-hyun, former Chief Investment Officer of Kakao.
In December, Kim stated, "I am committed to reforms, even considering changing the company's name if necessary," and began streamlining operations. By August 2024, Kakao had reduced its number of affiliates to 123, down from 144 the previous year, trimming 15 affiliates this year alone.
Additionally, the company implemented leadership changes at key affiliates and established independent entities such as the Management Innovation Committee and the Compliance and Trust Committee to oversee decision-making and governance reforms.
However, even as the new year began, Kakao’s legal risks intensified, culminating in the arrest of Kim Beom-soo in July 2024. With Kim absent, concerns have arisen over the potential loss of momentum in the company's reform efforts.
Under the leadership of CEO Chung Shin-a, Kakao has entered emergency management mode, but there have been no clear signs of reform progress. Meanwhile, Kim’s first court trial is scheduled for September 11.
#Kakao #KimBeomsoo #legalrisk #corporatereform #managementconflict #marketmanipulation #ITindustry #Kakaounion #leadershipchange #companyrestructuring #emergencymanagement #courttrial #laborrelations
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- Samsung 2nd in 5G Device Market Share in H1 2024, India Surpasses US as 2nd Largest Market
- Samsung Electronics ranked second in the global 5G device market in the first half of 2024, with a 21% market share. Apple led the market with a 25% share.
India emerged as the second-largest 5G device market globally, surpassing the U.S., thanks to rapid growth in 5G adoption during the first half of the year.
According to a report released on August 5 by Hong Kong-based market research firm Counterpoint Research, global shipments of 5G devices in the first half of 2024 increased by 20% year-on-year. For the first time, 5G devices accounted for more than 50% of total device shipments.
Samsung maintained second place in global 5G device market share, driven by strong performance from its Galaxy A series and flagship Galaxy S24 series, contributing significantly to its 21% share.
Apple retained the top spot with a 25% share, bolstered by strong sales of its iPhone 15 and 14 series.
Both Samsung and Apple dominated the top 10 models of 5G devices in the first half of 2024, each securing five spots on the list.
Xiaomi, with a sharp increase in shipments in the Indian market, secured third place in global 5G device market share.
India surpassed the U.S. to become the world’s second-largest 5G device market after China.
Prachir Singh, an analyst at Counterpoint Research, stated, "India overtook the U.S. to become the second-largest 5G device market in the first half of 2024, driven by a surge in shipments from brands like Xiaomi, Vivo, and Samsung in the budget segment."
Tarun Pathak, a researcher at Counterpoint Research, added, "5G devices accounted for 54% of all mobile devices in the first half of the year. With increasing supply of affordable 5G devices and the expansion of 5G networks, this trend is expected to accelerate."
Counterpoint Research forecasts that 5G devices will surpass 57% of total device shipments in the second half of 2024 and exceed 65% by 2025.
#Samsung #5Gmarket #smartphones #Apple #India5G #Xiaomi #global5Gmarket #telecommunications #marketshare #CounterpointResearch #techindustry
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- LG Uplus Seeks Breakthrough in EV Charging, Hwang Hyeon-sik Aims to Overcome EV Fire Phobia
- Hwang Hyeon-sik, CEO of LG Uplus, is focusing on breaking through the growth limitations of the telecommunications business by venturing into the electric vehicle (EV) charging services sector.
A key strength of LG Uplus's EV charging business lies in its ability to collaborate with other LG Group affiliates, such as LG Energy Solution and LG Electronics, to offer comprehensive battery solutions.
However, to achieve visible success, LG Uplus must address consumer fears stemming from EV fire incidents and overcome the temporary stagnation in EV demand, known as the "EV chasm."
As of August 6, 2024, with growth slowing in its traditional telecommunications services like 5G and IPTV, LG Uplus is facing increasing pressure to enhance profitability through new business avenues.
In the first half of 2024, LG Uplus's operating profit decreased by 13.4% year-on-year, with the net increase in 5G subscribers dropping below 10%. Additionally, IPTV subscriber growth has slowed to just over 1%.
Kim Hyun-yong, a researcher at Hyundai Motor Securities, noted, “Both 5G and IPTV, the two main pillars of the telecom industry, have entered a mature phase, leading to stagnation in subscriber and profit growth. With fewer non-telecom revenue sources compared to its competitors, LG Uplus will struggle to show significant growth until the next generation of mobile communications begins.”
Hwang, who was reappointed as CEO last year and has thrived under LG Group Chairman Koo Kwang-mo, is now being hampered by stagnation in the telecommunications sector.
To counter this, Hwang is actively exploring growth opportunities in the EV charging service sector.
In June 2024, LG Uplus launched a joint venture, ‘LG Uplus Bolt Up,’ in partnership with Kakao Mobility. LG Uplus invested KRW 25 billion to secure a 50%+1 share in the venture.
The company has also set a goal to become one of the top three providers in the slow EV charging market by 2027.
The EV charging service market has a bright outlook. According to global consulting firm Roland Berger, the global EV charging service market is expected to grow from US$ 55 billion (KRW 72 trillion) in 2023 to US$ 325 billion (KRW 472 trillion) by 2030.
Domestically, the number of electric vehicles is expected to rise from 390,000 in 2022 to 4.2 million by 2030.
LG Uplus has an advantage through its synergies with other LG Group affiliates. For instance, LG Electronics manufactures EV chargers, while LG Uplus builds charging stations, and LG Energy Solution provides battery diagnostics, creating a comprehensive solution.
However, LG Uplus’s EV charger distribution is still progressing slowly.
By the first half of 2024, LG Uplus had installed 10,700 slow chargers (7kW), far behind leading companies like GS Charge (61,000 units), Everon (38,000 units), and Powercube (36,000 units).
In addition, concerns have been raised that negative perceptions due to recent EV fire incidents and the EV chasm could delay the expansion of the EV charging business.
In response, Hwang is actively introducing EV charging technologies aimed at preventing fires.
Hyun Jun-yong, CEO of LG Uplus Bolt Up, stated in March 2024, “We will ensure that customers considering purchasing EVs do not hesitate due to concerns over inadequate charging infrastructure or safety.”
The company’s charging service platform, ‘Bolt Up,’ is equipped with features that automatically cut off power when abnormal signs such as overheating or overvoltage are detected.
The company is also considering adding cameras to charging stations to allow real-time monitoring of charging situations, as well as incorporating a black box feature to record activity during charging.
Some analysts suggest that the recent EV chasm phenomenon may provide extra time for the infrastructure development that EVs have long needed.
Jung Ji-soo, a researcher at Meritz Securities, commented, “The EV charging service business, part of LG Uplus's non-telecom ventures, received approval from the Fair Trade Commission for its partnership with Kakao Mobility in April and is expected to begin full operations by the end of Q3 2024. This is a positive step toward securing long-term growth drivers.”
#LGUplus #EVcharging #HwangHyeonsik #BoltUp #telecomgrowth #electricvehiclefirephobia #EVchasm #5G #IPTV #LGGroup #newbusiness
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- CJ Olive Young’s "Power Abuse" Controversy Reignited, Threatens Efforts to Address 'Market Dominance Abuse'
- CJ Olive Young has once again been embroiled in a "power abuse" controversy. This comes less than a year after a similar issue led to an investigation by the Korea Fair Trade Commission (KFTC), which had concluded its review.
The situation has become awkward, especially as the company had increased its efforts to resolve previous allegations of "market dominance abuse" by expanding its mutual growth activities.
Some observers suggest that CJ Olive Young, as a dominant player in the offline cosmetics distribution market, may have overreacted to the rise of new online competitors, leading to repeated missteps.
According to sources within the cosmetics distribution industry, both CJ Olive Young and Musinsa, the alleged victim in this case, are busy trying to ascertain the facts and prepare countermeasures.
The controversy centers on allegations that a CJ Olive Young representative pressured purchasing managers of small cosmetics brands working with Musinsa not to participate in an event organized by Musinsa.
The KFTC is reportedly aware of the situation and is reviewing the allegations.
As the facts have yet to be fully confirmed, it remains uncertain whether the KFTC will formally launch an investigation.
However, since Musinsa is reportedly considering raising the issue officially, it is possible that the KFTC may once again focus its attention on CJ Olive Young.
A Musinsa representative stated, “We are looking into whether any issues occurred with the brands and are considering filing a report for business interference.”
The representative added, “We were preparing to open a pop-up store in Seongsu-dong, Seoul, and it is true that some brands unexpectedly canceled their participation, causing delays in our preparations.”
This situation is particularly challenging for CJ Olive Young, as the company had faced a similar issue last year, which led to an investigation by the KFTC.
At that time, the KFTC found that CJ Olive Young had engaged in practices such as △monopolizing promotional events, △failing to revert prices to normal after promotional events, and △unfairly collecting information processing fees. As a result, the KFTC issued corrective orders and imposed a fine of KRW 1.896 billion (US$ 1.37 million).
However, the KFTC did not reach a conclusion regarding the core issue of "market dominance abuse," citing uncertainty about whether CJ Olive Young held a dominant market position at that stage.
Although CJ Olive Young avoided punishment for market dominance abuse, the decision to conclude the review without a final ruling does not equate to a full exoneration, as the KFTC’s decision was based on the difficulty of confirming the facts rather than a determination of innocence.
Given that the KFTC deferred judgment last year, if it decides to investigate this new controversy, it may apply stricter scrutiny to CJ Olive Young.
Since last year's controversy, CJ Olive Young has introduced internal control measures to prevent a recurrence and has actively promoted initiatives supporting small brands. Earlier this year, the company announced a mutual growth plan that would invest approximately KRW 300 billion (US$ 216 million) to support the growth of small brands and develop the K-beauty ecosystem.
CJ Group, on a broader scale, has also supported small brands by providing them with promotional opportunities at international events, aiding their expansion overseas.
However, if the current allegations of power abuse are proven true, much of CJ Olive Young’s efforts could be overshadowed.
A CJ Olive Young representative stated, “We will carefully verify the facts and take necessary actions.”
Some view the recurring power abuse allegations as a sign of increasing pressure on CJ Olive Young. While the company continues to dominate the offline cosmetics distribution market, powerful online competitors are now seeking to enter the cosmetics distribution space.
Last year, allegations of power abuse were linked to CJ Olive Young's efforts to curb Coupang, the leading player in Korea's e-commerce market. The current controversy involves Musinsa, the country’s largest online fashion platform.
#CJOliveYoung #marketdominanceabuse #KoreaFairTradeCommission #KFTC #powerabuse #cosmeticsdistribution #Musinsa #Coupang #Kbeauty #smallbrandssupport #ecommercecompetition #fairtrade
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- Samsung's "Super Gap" in HBM and DRAM Faces Challenges, Jun Young-hyun Plans Major Overhaul by Year-End
- Samsung Electronics is facing increasing internal concerns as its technological edge in not only high-bandwidth memory (HBM) but also standard DRAM appears to be weakening.
Vice Chairman Jun Young-hyun, head of Samsung's Device Solutions (DS) division, is expected to focus on creating a more efficient work environment through a major organizational reshuffle and personnel changes by the end of the year.
According to industry sources, there is growing speculation that Samsung’s once-dominant position in cutting-edge DRAM process development and production is being threatened.
Recently, SK Hynix announced that it had successfully developed the world’s first 16GB DDR5 DRAM using 6th-generation 1c (11-12nm) technology, surpassing Samsung in standard DRAM technology as well, not just HBM.
SK Hynix’s 1c DRAM is estimated to have a yield of around 60%, while Samsung’s 1c DRAM yield reportedly remains in the single digits, potentially delaying mass production until 2025.
Samsung is also struggling with yield issues in its 5th-generation 1b (12-13nm) DRAM, which is already in mass production. Typically, DRAM production stabilizes at an 80% yield, but Samsung’s 1b DRAM yield is reportedly around 50%. This has also impacted its ability to supply LPDDR (low-power DRAM) to its Mobile eXperience (MX) division in sufficient quantities.
As a result, the gap in DRAM market share between Samsung and SK Hynix is closing rapidly. Samsung’s DRAM market share, which stood at 43.9% in Q1 2023, remained largely unchanged at 42.9% in Q2 2023. In contrast, SK Hynix’s share increased from 24.4% in Q1 to 31.1% and further to 34.5% in Q2 2023.
Industry insiders point to Samsung’s organizational culture as a potential reason for its declining competitive edge. Short executive tenures are said to encourage a focus on short-term results (1-2 years) at the expense of long-term technological advancements. Additionally, the organization has become more bureaucratic and less agile in responding to rapidly changing technology trends.
In August, Vice Chairman Jun addressed these concerns, stating, “We need to break down communication barriers between leaders and departments. Regardless of rank or position, we must acknowledge what isn’t working and have the courage to address challenges transparently, rebuilding a culture of intense debate within the semiconductor division.”
While Jun implemented some organizational changes in July 2023, industry observers believe these measures were insufficient. There are now expectations that the year-end restructuring will involve significant changes to Samsung’s corporate culture, focusing on workforce adjustments and a deeper organizational overhaul.
Experts warn that Samsung risks following in Intel’s footsteps, whose decline was attributed to mismanagement of personnel and a bureaucratic culture. If Samsung fails to address these issues, it could face similar setbacks.
Jun is expected to make sweeping changes to the senior leadership of the DS division. This wouldn’t be the first time—he previously replaced most senior executives at Samsung SDI in 2021 after safety concerns related to battery fires cast doubt on the company’s market position.
Given the underperformance in key areas such as HBM, DRAM, foundry, and semiconductor design, Jun is likely to apply the principle of “meritocracy,” where those responsible for successes or failures will face corresponding consequences.
While last year’s executive reshuffle was smaller than expected, this year’s changes are predicted to be much more significant.
There are also expectations that the way employee performance is measured and rewarded will be revamped. Currently, Samsung’s system rewards teams based on whether they achieve their pre-set goals. However, this has led to inefficiencies when multiple departments work together on a single project, as their goals may not align. Some employees have suggested that organizing teams around specific projects could improve efficiency.
A semiconductor industry insider commented, “Samsung is currently facing the urgent challenge of recovering its core competitiveness. Without an organizational culture that allows talent to work efficiently, the company could face even greater crises if the semiconductor market continues to decline.”
#SamsungElectronics #JunYoungHyun #DRAM #HBM #semiconductors #organizationalrestructure #SKHynix #semiconductoryields #corporateculture #semiconductormarket
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- Hyundai Prepares for Hydrogen Era: Chung Eui-sun Seeks Collaboration with Toyota to Expand Hydrogen Ecosystem
- The global fuel cell electric vehicle (FCEV) market is in decline. Key reasons for the downturn in the fledgling hydrogen vehicle market include insufficient infrastructure, such as hydrogen refueling stations, and a lack of new vehicle models.
Chung Eui-sun, chairman of Hyundai Motor, has been holding multiple meetings with Toyota's chairman, Akio Toyoda, this year, sparking speculation that the two automakers might collaborate to develop the global hydrogen vehicle ecosystem.
According to battery market research firm SNE Research on the 4th, the global hydrogen vehicle market has been shrinking since 2022. Although the number of hydrogen vehicles sold worldwide more than doubled from 9,483 units in 2020 to 20,704 in 2022, last year's sales dropped by 20.7% to 16,413 units, and sales continued to decline in the first half of this year, down 34.1% year-on-year to 5,621 units.
In terms of market share for hydrogen vehicle sales in the first half of this year, Hyundai ranked first with 32.7%, followed by Toyota with 22.8%. Chinese companies, focusing on commercial vehicles, accounted for about 44% of the market combined.
However, hydrogen vehicle sales last year amounted to just 0.018% of the 90.1 million cars sold worldwide, highlighting the underdeveloped state of the market.
The lack of passenger hydrogen vehicle options and inadequate refueling infrastructure are the primary factors contributing to the decline in this nascent market. Currently, only three global automakers—Hyundai, Toyota, and Honda—have the capability to mass-produce passenger hydrogen vehicles.
Honda recently re-entered the hydrogen vehicle market, starting production of the "CR-V e:FCEV" in Ohio in June 2023, after halting production of the Clarity in Japan in 2021. Sales are set to begin next year.
For Hyundai, expanding the ecosystem by working with governments and other industry players, rather than focusing solely on increasing market share, may be more crucial at this stage.
An industry insider stated, "Honda's re-entry into the hydrogen vehicle market could positively contribute to the overall market ecosystem, which would benefit Hyundai."
With this backdrop, there is growing interest in whether Hyundai will form a cooperative relationship with Toyota, the world's top automaker, in the hydrogen vehicle sector.
Hyundai sponsored the "2nd Korea-U.S.-Japan Economic Dialogue" at the Grand Hyatt Hotel in Seoul, attended by Chung Eui-sun, Korean Foreign Minister Cho Tae-yul, and Toyota executives, including representatives from Toyota's parts affiliate, Denso.
While details of the discussions remain speculative, it's believed that Hyundai and Toyota may have touched on potential hydrogen-related collaborations.
Tetsuo Ogawa, president of Toyota North America, said after the meeting, "We discussed hydrogen and autonomous driving with Hyundai. Although no specific agreements were reached, we explored areas for future cooperation."
Chung is expected to meet with Toyota Chairman Akio Toyoda next month during his visit to Korea to further discuss collaboration on expanding the hydrogen ecosystem.
Neither Hyundai nor Toyota has officially confirmed any details about potential collaboration.
Earlier this year in March, Chung visited Toyota’s headquarters in Japan, where he and Toyoda reportedly discussed hydrogen vehicles and future mobility.
Industry observers anticipate that next month’s meeting may result in concrete cooperation plans between the two companies regarding hydrogen vehicles and the broader hydrogen ecosystem.
Toyota has already partnered with BMW to jointly develop hydrogen vehicles. Japanese media outlets, including *Nikkei* and *Kyodo News*, recently reported that Toyota would supply hydrogen fuel cells and tanks to BMW, while BMW would handle the development of driving systems. The enhanced partnership is expected to be officially announced on the 5th.
The collaboration aims to standardize hydrogen vehicle components, reducing costs, and addressing the high prices that have hindered hydrogen vehicle sales. Toyota and BMW first partnered on hydrogen technology in 2012, with Toyota supplying hydrogen fuel cell cells to BMW.
BMW is currently developing its first hydrogen vehicle, the iX5 Hydrogen, which is expected to launch next year. The partnership aims to establish a mass production system for hydrogen vehicles.
Hyundai recently announced that it would launch the next-generation model of its Nexo hydrogen fuel cell SUV, equipped with its 2.5-generation fuel cell system, in May next year.
However, this timeline is slower than Hyundai's original plan to release a 3rd-generation hydrogen fuel cell system in 2023. The 3rd-generation system is expected to reduce costs by over 50% compared to the 2nd-generation Nexo. The new system will also be adaptable for use in various applications, such as large ships, trains, and buildings.
Hyundai pushed back the mass production of the 3rd-generation hydrogen fuel cell system to 2026, citing technical challenges and low market demand as significant factors.
According to Hyundai, development of the 3rd-generation technology is complete, with prototype models undergoing internal reliability tests.
Chung is accelerating the development of next-generation hydrogen fuel cells through an organizational restructuring in June, transferring Hyundai Mobis' hydrogen fuel cell facilities, assets, R&D, and production expertise to Hyundai Motor.
#Hyundai #Toyota #ChungEuiSun #AkioToyoda #hydrogenvehicles #hydrogenecosystem #fuelcell #FCEV #automotiveindustry #globalcollaboration #hydrogenfuel
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- GC Biopharma's 'Allyglow' Secures Early U.S. Sales Network, a Positive Sign for Huh Eun-chul’s Performance Improvement
- Huh Eun-chul, CEO of GC Biopharma, has successfully secured the U.S. sales network for the immune deficiency blood product 'Allyglow' faster than expected, signaling potential profitability improvements in the second half of the year.
The early achievement of the U.S. sales network, originally targeted for completion by the end of the year, was accomplished in just over a month, raising expectations for a rapid increase in local sales.
According to the pharmaceutical industry on September 4th, GC Biopharma has listed Allyglow with the three major U.S. pharmacy benefit managers (PBM), which could lead to performance improvements for Huh Eun-chul, CEO of GC Biopharma, in the second half of the year.
GC Biopharma, after starting sales in the U.S. just over a month ago, successfully signed contracts with the three major PBMs and listed Allyglow in their formularies. The three major PBMs in the U.S. are Express Scripts (ESI), CVS Caremark, and Optum, which control 80% of the U.S. prescription drug market.
Given that PBMs play a key role in the U.S. pharmaceutical distribution system, this indicates that GC Biopharma has established a stable and rapid sales network in the U.S.
GC Biopharma had initially set a goal to contract with the three major PBMs and eight specialty pharmacies (SP) by the end of this year when it announced Allyglow’s entry into the U.S. market.
However, just a month after launching in the U.S. in July, the company not only achieved listing with the three major PBMs but also signed contracts with seven specialty pharmacies, nearly meeting its annual target.
For Huh, the faster-than-expected completion of contracts with key U.S. pharmaceutical distributors means that the company can start seeing the benefits of its U.S. entry earlier than anticipated.
Kim Seung-min, a researcher at Mirae Asset Securities, commented, “GC Biopharma has secured U.S. pharmaceutical sales channels faster than expected, ensuring no distribution issues for Allyglow in the U.S. market. Since the initial shipments, there have been three additional shipments of Allyglow in August alone.”
On July 8th, GC Biopharma shipped the initial batch of Allyglow for U.S. sales, and by the last week of July, it had officially launched the product in the U.S., showing early signs of success.
Huh's efforts, including the swift establishment of a U.S. sales subsidiary after several attempts to enter the U.S. market, seem to have paid off.
Since 2015, Huh has sought U.S. approval for the blood product Allyglow from the U.S. Food and Drug Administration (FDA), but ultimately failed in 2017.
He then re-applied in July 2023 for a 10% concentration version of the product, which was more concentrated than the previous version.
During this process, Huh changed the name of the existing U.S. subsidiary and built a sales network with a small number of sales personnel.
Allyglow appears to have a high likelihood of penetrating the U.S. market quickly from the early stages.
In August 2022, GC Biopharma renamed its former U.S. subsidiary GC Mokam to GC Biopharma USA and began operating with a small team of sales personnel.
Considering that GC Biopharma received FDA approval for Allyglow in December last year, the company had been preparing for U.S. sales for a year and a half.
For Huh, this is laying the groundwork to improve GC Biopharma's profitability in the second half of the year.
Among South Korea's five major pharmaceutical companies (Yuhan, Chong Kun Dang, Hanmi Pharmaceutical, Daewoong Pharmaceutical, and GC Biopharma), GC Biopharma has uniquely struggled with profitability.
The company's high reliance on blood products, which account for a significant portion of its revenue, coupled with rising raw material costs, such as the price of blood, have contributed to its cost burdens, as price increases have been difficult.
It is estimated that blood products accounted for 35% of GC Biopharma's total revenue last year. As such, an improvement in blood product profitability could have a significant impact on the company's overall performance.
GC Biopharma reported an operating profit of KRW 2.6 billion (US$ 1.87 million) on a consolidated basis in the first half of this year, a 73.9% decline from the same period last year.
Although only Hanmi Pharmaceutical and Daewoong Pharmaceutical reported operating profit growth among the five major pharmaceutical companies in the first half of this year, GC Biopharma's decline in operating profit was more significant compared to Yuhan and Chong Kun Dang.
A GC Biopharma representative told Business Post, "We aim to secure an early foothold in the U.S. market with Allyglow and plan to expand sales through this."
#GC Biopharma #Allyglow #bloodproducts #immunedeficiency #USmarket #pharmaceuticalsales #FDAapproval #HuhEunchul #profitimprovement #pharmacybenefitmanagers
