Samsung Group (Hangul: 삼성그룹; hanja: 三星그룹; Korean pronunciation: [sam.sʌŋ ɡɯˈɾup̚]) is a South Korean multinational conglomerate company headquartered in Samsung Town, Seoul. It comprises numerous subsidiaries and affiliated businesses, most of them united under the Samsung brand, and is the largest South Korean chaebol (business conglomerate).
Samsung was founded by Lee Byung-chul in 1938 as a trading company. Over the next three decades the group diversified into areas including food processing, textiles, insurance, securities and retail. Samsung entered the electronics industry in the late 1960s and the construction and shipbuilding industries in the mid-1970s; these areas would drive its subsequent growth. Following Lee's death in 1987, Samsung was separated into four business groups – Samsung Group, Shinsegae Group, CJ Group and Hansol Group. Since the 1990s Samsung has increasingly globalized its activities, and electronics, particularly mobile phones and semiconductors, have become its most important source of income.
Notable Samsung industrial subsidiaries include Samsung Electronics (the world's largest information technology company measured by 2012 revenues, and 4th in market value),[2] Samsung Heavy Industries (the world's 2nd-largest shipbuilder measured by 2010 revenues),[3] and Samsung Engineering and Samsung C&T (respectively the world's 13th and 36th-largest construction companies).[4] Other notable subsidiaries include Samsung Life Insurance (the world's 14th-largest life insurance company),[5] Samsung Everland (operator of Everland Resort, the oldest theme park in South Korea),[6] Samsung Techwin (an aerospace, surveillance and defense company) and Cheil Worldwide (the world's 15th-largest advertising agency measured by 2012 revenues).[7][8]
Samsung has a powerful influence on South Korea's economic development, politics, media and culture, and has been a major driving force behind the "Miracle on the Han River".[9][10] Its affiliate companies produce around a fifth of South Korea's total exports.[11] Samsung's revenue was equal to 17% of South Korea's $1,082 billion GDP.[12]
In 2013, Samsung began construction on building the world's largest mobile phone factory in the Thai Nguyen province of Vietnam.[13]
Name
According to the founder of Samsung Group, the meaning of the Korean hanja word Samsung (三星) is "tristar" or "three stars". The word "three" represents something "big, numerous and powerful"; the "stars" mean eternity.[14]
History
1938 to 1970
The headquarters of Samsung Sanghoes in Daegu in the late 1930s
In 1938, Lee Byung-chull (1910–1987) of a large landowning family in the Uiryeong county came to the nearby Daegu city and founded Samsung Sanghoe (삼성상회, 三星商會), a small trading company with forty employees located in Su-dong (now Ingyo-dong).[15] It dealt in groceries produced in and around the city and produced its own noodles. The company prospered and Lee moved its head office to Seoul in 1947. When the Korean War broke out, however, he was forced to leave Seoul and started a sugar refinery in Busan named Cheil Jedang. After the war, in 1954, Lee founded Cheil Mojik and built the plant in Chimsan-dong, Daegu. It was the largest woolen mill ever in the country and the company took on the aspect of a major company.
Samsung diversified into many areas and Lee sought to help establish Samsung as an industry leader in a wide range of enterprises, moving into businesses such as insurance, securities, and retail. President Park Chung Hee placed great importance on industrialization, and focused his economic development strategy on a handful of large domestic conglomerates, protecting them from competition and assisting them financially.[16]
In 1947, Cho Hong-jai (the Hyosung group’s founder) jointly invested in a new company called Samsung Mulsan Gongsa (삼성물산공사), or the Samsung Trading Corporation, with the Samsung Group founder Lee Byung-chull. The trading firm grew to become the present-day Samsung C&T Corporation. But after some years Cho and Lee separated due to differences in management between them. He wanted to get up to a 30% group share. After settlement, Samsung Group was separated into Samsung Group and Hyosung Group, Hankook Tire, and others.[17][18]
In the late 1960s, Samsung Group entered into the electronics industry. It formed several electronics-related divisions, such as Samsung Electronics Devices, Samsung Electro-Mechanics, Samsung Corning, and Samsung Semiconductor & Telecommunications, and made the facility in Suwon. Its first product was a black-and-white television set.
1970 to 1990
The SPC-1000, introduced in 1982, was Samsung's first personal computer (Korean market only) and uses an audio cassette tape to load and save data – the floppy drive was optional[19]
In 1980, Samsung acquired the Gumi-based Hanguk Jeonja Tongsin and entered the telecommunications hardware industry. Its early products were switchboards. The facility were developed into the telephone and fax manufacturing systems and became the center of Samsung's mobile phone manufacturing. They have produced over 800 million mobile phones to date.[20] The company grouped them together under Samsung Electronics in the 1980s.
After Lee, the founder's death in 1987, Samsung Group was separated into four business groups—Samsung Group, Shinsegae Group, CJ Group, and the Hansol Group.[21] Shinsegae (discount store, department store) was originally part of Samsung Group, separated in the 1990s from the Samsung Group along with CJ Group (Food/Chemicals/Entertainment/logistics) and the Hansol Group (Paper/Telecom). Today these separated groups are independent and they are not part of or connected to the Samsung Group.[22] One Hansol Group representative said, "Only people ignorant of the laws governing the business world could believe something so absurd", adding, "When Hansol separated from the Samsung Group in 1991, it severed all payment guarantees and share-holding ties with Samsung affiliates." One Hansol Group source asserted, "Hansol, Shinsegae, and CJ have been under independent management since their respective separations from the Samsung Group". One Shinsegae department store executive director said, "Shinsegae has no payment guarantees associated with the Samsung Group".[22]
In the 1980s, Samsung Electronics began to invest heavily in research and development, investments that were pivotal in pushing the company to the forefront of the global electronics industry. In 1982, it built a television assembly plant in Portugal; in 1984, a plant in New York; in 1985, a plant in Tokyo; in 1987, a facility in England; and another facility in Austin, Texas, in 1996. As of 2012, Samsung has invested more than US$13 billion in the Austin facility, which operates under the name Samsung Austin Semiconductor. This makes the Austin location the largest foreign investment in Texas and one of the largest single foreign investments in the United States.[23][24]
1990 to 2000
Samsung Group headquarters at Samsung Town, Seoul
Samsung started to rise as an international corporation in the 1990s. Samsung's construction branch was awarded a contract to build one of the two Petronas Towers in Malaysia, Taipei 101 in Taiwan and the Burj Khalifa in United Arab Emirates.[25] In 1993, Lee Kun-hee sold off ten of Samsung Group's subsidiaries, downsized the company, and merged other operations to concentrate on three industries: electronics, engineering, and chemicals. In 1996, the Samsung Group reacquired the Sungkyunkwan University foundation.
Samsung became the largest producer of memory chips in the world in 1992, and is the world's second-largest chipmaker after Intel (see Worldwide Top 20 Semiconductor Market Share Ranking Year by Year).[26] In 1995, it created its first liquid-crystal display screen. Ten years later, Samsung grew to be the world's largest manufacturer of liquid-crystal display panels. Sony, which had not invested in large-size TFT-LCDs, contacted Samsung to cooperate, and, in 2006, S-LCD was established as a joint venture between Samsung and Sony in order to provide a stable supply of LCD panels for both manufacturers. S-LCD was owned by Samsung (50% plus one share) and Sony (50% minus one share) and operates its factories and facilities in Tangjung, South Korea. As on 26 December 2011 it was announced that Samsung had acquired the stake of Sony in this joint venture.[27]
Compared to other major Korean companies, Samsung survived the 1997 Asian financial crisis relatively unharmed. However, Samsung Motor was sold to Renault at a significant loss. As of 2010, Renault Samsung is 80.1 percent owned by Renault and 19.9 percent owned by Samsung. Additionally, Samsung manufactured a range of aircraft from the 1980s to 1990s. The company was founded in 1999 as Korea Aerospace Industries (KAI), the result of merger between then three domestic major aerospace divisions of Samsung Aerospace, Daewoo Heavy Industries, and Hyundai Space and Aircraft Company. However, Samsung still manufactures aircraft engines and gas turbines. [28]
2000 to 2013
The Samsung pavilion at Expo 2012.
In 2000, Samsung opened a computer programming laboratory in Warsaw, Poland. Its work began with set-top-box technology before moving into digital TV and smartphones. As of 2011, the Warsaw base is Samsung's most important R&D center in Europe, forecast to be recruiting 400 new-hires per year by the end of 2013.[29]
In 2001 Samsung Techwin became the sole supplier of a combustor module for the Rolls-Royce Trent 900 used by the Airbus A380, the world's largest passenger airliner.[30] Samsung Techwin is also a revenue-sharing participant in the Boeing's 787 Dreamliner GEnx engine program.[31]
The prominent Samsung sign in Times Square, New York City.
In 2010, Samsung announced a ten-year growth strategy centered around five businesses.[32] One of these businesses was to be focused on biopharmaceuticals, to which the company has committed ₩2.1 trillion.[33]
In December 2011, Samsung Electronics sold its hard disk drive (HDD) business to Seagate.[34]
In the first quarter of 2012, Samsung Electronics became the world's largest mobile phone maker by unit sales, overtaking Nokia, which had been the market leader since 1998.[35][36] In the August 21 edition of the Austin American-Statesman, Samsung confirmed plans to spend 3 to 4 billion dollars converting half of its Austin chip manufacturing plant to a more profitable chip.[37] The conversion should start in early 2013 with production on line by the end of 2013. On March 14, 2013, Samsung unveiled the Galaxy S4.
On 24 August 2012, nine American jurors ruled that Samsung had to pay Apple $1.05 billion in damages for violating six of its patents on smartphone technology. The award was still less than the $2.5 billion requested by Apple. The decision also ruled that Apple did not violate five Samsung patents cited in the case.[38] Samsung decried the decision saying that the move could harm innovation in the sector.[39] It also followed a South Korean ruling stating that both companies were guilty of infringing on each other's intellectual property.[40] In the first trading after the ruling, Samsung shares on the Kospi index fell 7.7%, the largest fall since October 24, 2008, to 1,177,000 Korean won.[41] Apple then sought to ban the sales of eight Samsung phones (Galaxy S 4G, Galaxy S2 AT&T, Galaxy S2 Skyrocket, Galaxy S2 T-Mobile, Galaxy S2 Epic 4G, Galaxy S Showcase, Droid Charge and Galaxy Prevail) in the United States[42] which has been denied by the court.[43]
On 4 September 2012, Samsung announced that it plans to examine all of its Chinese suppliers for possible violations of labor policies. The company said it will carry out audits of 250 Chinese companies that are its exclusive suppliers to see if children under the age of 16 are being used in their factories.[44]
In 2013 a New Zealand news outlet reported a number of Samsung washing machines spontaneously catching on fire.[45] The corporation is expected to spend $14 billion on advertising and marketing in 2013, with publicity appearing in TV and cinema ads, on billboards, and at sports and arts events. In November 2013, the corporation was valued at $227 billion.[46]
Acquisitions and attempted acquisitions
Samsung has made the following acquisitions and attempted acquisitions:[47]
Rollei – Swiss watch battle
Samsung Techwin acquired a German camera-maker Rollei in 1995. Samsung (Rollei) used its optic expertise on the crystals of a new line of 100% Swiss-made watches, designed by a team of watchmakers at Nouvelle Piquerez S.A. in Bassequort, Switzerland. Rolex's decision to fight Rollei on every front stemmed from the close resemblance between the two names and fears that its sales would suffer as a consequence. In the face of such a threat, the Geneva firm decided to confront. This was also a demonstration of the Swiss watch industry's determination to defend itself when an established brand is threatened. Rolex sees this front-line battle as vital for the entire Swiss watch industry. Rolex has succeeded in keeping Rollei out of the German market. On March 11, 1995, the Cologne District court prohibited the advertising and sale of Rollei watches on German territory.[48][49]
Fokker, a Dutch aircraft maker
Samsung lost a chance to revive its failed bid to take over Dutch aircraft maker Fokker when other airplane makers rejected its offer to form a consortium. The three proposed partners—Hyundai, Hanjin, and Daewoo—notified the South Korean government that they would not join Samsung Aerospace Industries.[50]
AST Research
Samsung bought AST (1994) and tried to break into North America, but the effort was unsuccessful. Samsung was forced to close the California-based computer maker following mass defection of research staff and a string of losses.[51]
FUBU clothing and apparel
In 1992, Daymond John had started the company with a hat collection that was made in his house in the Queens area of New York City. To fund the company, John had to mortgage his house for $100,000. With his friends J. Alexander Martin, Carl Brown, and Keith Perrin, half of his house was turned into the first factory of FUBU, while the other half remained as the living quarters. Along with the expansion of FUBU, Samsung invested in FUBU in 1995.[52]
Lehman Brothers Holdings’ Asian operations
Samsung Securities was one of a handful of brokerages looking into Lehman Brothers Holdings. But Nomura Holdings has reportedly waved the biggest check to win its bid for Lehman Brothers Holdings’ Asian operations, beating out Samsung Securities, Standard Chartered, and Barclays.[53] Ironically, after few months Samsung Securities Co., Ltd. and City of London-based N M Rothschild & Sons (more commonly known simply as Rothschild) have agreed to form a strategic alliance in investment banking business. Two parties will jointly work on cross border mergers and acquisition deals.[54]
MEDISON Co.,Ltd. – Ultrasound Monitors
In December 2010, Samsung Electronics bought MEDISON Co., a South Korean medical-equipment company, the first step in a long-discussed plan to diversify from consumer electronics.[55]
Grandis Inc. – memory developer
In July 2011, Samsung announced that it had acquired spin-transfer torque random access memory (MRAM) vendor Grandis Inc.[56] Grandis will become a part of Samsung's R&D operations and will focus on development of next generation random-access memory.[57]
Samsung and Sony joint venture – LCD display
On December 26, 2011 the board of Samsung Electronics approved a plan to buy Sony's entire stake in their 2004 joint liquid crystal display (LCD) venture for 1.08 trillion won ($938.97 million).[58]
mSpot, Inc – Music Service
On May 9, 2012, mSpot announced that it had been acquired by Samsung Electronics with the intention of a cloud based music service.[59] The succeeding service was Samsung Music Hub.
NVELO, Inc. – Cache Software Developer
In December 2012, Samsung announced that it had acquired the privately held storage software vendor NVELO, Inc., based in Santa Clara, California.[60] NVELO will become part of Samsung's R&D operations, and will focus on software for intelligently managing and optimizing next-generation Samsung SSD storage subsystems for consumer and enterprise computing platforms.
NeuroLogica – Portable CT scanner
In January 2013, Samsung announced that it has acquired medical imaging company NeuroLogica, part of the multinational conglomerate’s plans to build a leading medical technology business. Terms of the deal were not disclosed.[61]
Troopler
