Samsung: From Dried Fish to the World's Memory

Zusammenfassung

Samsung is the company that turned South Korea into a technology superpower and now sits at the physical foundation of modern computing. Founded in 1938 as a trading company dealing in dried fish, vegetables, and noodles, Samsung Electronics (established 1969) became the world’s largest manufacturer of memory chips, the largest maker of smartphones, and a dominant force in displays, image sensors, and televisions. Its rise was driven by a strategy almost the opposite of Silicon Valley’s: massive, relentless capital investment in manufacturing — especially the brutally cyclical memory-chip business — combined with a willingness to copy fast and then out-engineer the originators. Today Samsung and TSMC are the two companies on which the entire digital economy’s hardware depends.

Lee Byung-chul and the Trading House

Lee Byung-chul founded Samsung (“three stars” in Korean) in 1938 in Daegu, Korea, as a trading company exporting groceries to China. Over the following decades the Samsung Group grew into a sprawling chaebol — a family-controlled industrial conglomerate — with interests in sugar refining, textiles, insurance, construction, and shipbuilding.

Samsung Electronics was founded in 1969, initially assembling black-and-white televisions and home appliances under license from Japanese partners like Sanyo. For its first decade it was a low-cost manufacturer of other companies’ designs — a typical position for Korean industry in the 1970s.

The Bet on Memory Chips

The decision that made Samsung a global technology power was its 1983 entry into semiconductor memory — specifically DRAM (dynamic random-access memory). At the time, the industry was dominated by American firms (Intel, Texas Instruments) and Japanese firms (NEC, Hitachi, Toshiba). Entering the capital-intensive, technically demanding memory business was an enormous gamble for a company with no chip-design heritage.

Chairman Lee Byung-chul and later his son Lee Kun-hee committed to it with a strategy that became Samsung’s signature: counter-cyclical investment. The memory market is violently cyclical — periods of shortage and high prices followed by gluts and collapses. Samsung repeatedly invested heavily in new fabrication capacity during downturns, when competitors were cutting back. When demand recovered, Samsung had the capacity and the newest process technology, and it could undercut rivals on price while they were still recovering. This drove weaker competitors out of the DRAM business one by one.

By the early 1990s Samsung had become the world’s largest DRAM manufacturer, a position it has held ever since. It later extended this dominance to NAND flash memory — the storage in every smartphone, SSD, and memory card — which it co-pioneered and continues to lead.

Why Memory Is a Manufacturing War, Not a Design War

Unlike logic chips (CPUs, GPUs), where architecture and design dominate, memory chips are commodities: a DRAM bit is a DRAM bit. Competition is won by whoever can manufacture at the smallest geometry, highest yield, and lowest cost — which requires tens of billions of dollars in fabs and flawless process engineering. This favored a company willing to make enormous, sustained capital bets and tolerate brutal price cycles. Samsung’s organizational ability to do this, decade after decade, is the core of its semiconductor dominance. By the 2010s the DRAM market had consolidated to just three players: Samsung, SK Hynix (also Korean), and Micron (American).

The “New Management” Transformation

In 1993, chairman Lee Kun-hee, frustrated that Samsung was still seen as a maker of cheap, second-rate products, delivered his famous “Frankfurt Declaration” to executives: “Change everything except your wife and children.” The New Management initiative demanded a wholesale shift from quantity to quality. In a now-legendary 1995 episode, Lee had 150,000 defective phones and fax machines piled in a factory yard and burned and bulldozed in front of the employees who made them.

The cultural shift worked. Samsung moved from low-cost imitator toward design and quality leadership. Its industrial design, brand, and marketing investments turned it from a component supplier into a premium consumer brand.

Smartphones and the War with Apple

Samsung had made mobile phones since the late 1980s, but its defining mobile moment came with Android. When Apple’s iPhone (2007) redefined the phone, most incumbents (Nokia, BlackBerry, Motorola) failed to respond. Samsung moved fast, adopting Google’s Android operating system and launching the Galaxy S line in 2010 and the Galaxy Note in 2011 — the device that popularized the large-screen “phablet.”

Samsung’s manufacturing scale, vertical integration (it made its own displays, memory, and processors), and rapid iteration made it the world’s largest smartphone maker by volume, a position it has held against both Apple at the high end and Chinese rivals (Xiaomi, Oppo, Huawei) below.

The rise triggered the most expensive design-patent war in tech history. Apple sued Samsung in 2011, alleging the Galaxy phones copied the iPhone’s look and interface. The litigation spanned years and multiple countries; a US jury awarded Apple over $1 billion (later reduced and re-litigated), and the case became a landmark in design-patent law. Critically, Samsung was also one of Apple’s largest suppliers — making chips and displays for the iPhone even while fighting Apple in court, an emblem of the tangled “coopetition” of the modern hardware industry.

The Galaxy Note 7 Recall

In 2016, Samsung’s flagship Galaxy Note 7 began catching fire due to battery defects. After an initial recall and replacement units that also caught fire, Samsung was forced to permanently discontinue the product and recall every unit — airlines banned it from flights worldwide. The episode cost billions and was a severe blow to Samsung’s quality reputation, demonstrating the risks of pushing battery energy density and rushing a flagship to market. Samsung overhauled its battery-safety testing in response and recovered its standing in subsequent generations.

Displays, Sensors, and the Foundry Ambition

Samsung Display is a world leader in OLED screens, supplying the displays for its own phones and for competitors including Apple. Samsung is also a major maker of image sensors and a top global television brand.

In logic-chip foundry — manufacturing chips designed by others — Samsung is the world’s number-two contract manufacturer, behind Taiwan’s TSMC. Samsung has invested aggressively to close the gap at the cutting edge (3-nanometer and below) and has won orders from Qualcomm, Nvidia, and Tesla, but it has struggled to match TSMC’s manufacturing yields and customer trust. The foundry race is one of the central contests of the 2020s semiconductor world. For the foundry model Samsung competes in, see The Semiconductor Race.

Governance and the Chaebol Question

Samsung’s power within South Korea raised persistent governance concerns. The group’s control was maintained through a complex web of cross-shareholdings among its affiliates, allowing the founding Lee family to control the empire with a relatively small direct stake. In 2017, Lee Jae-yong (Jay Y. Lee), the de facto leader and grandson of the founder, was convicted of bribery in a scandal that also brought down South Korea’s president — a case that crystallized debates about the outsized, lightly-checked power of the chaebol in Korean society.

Significance

Samsung is the proof that the center of computing’s physical layer shifted to East Asia. Almost every digital device on Earth contains Samsung memory, and a great many contain its displays, sensors, or processors. Its strategy — win through manufacturing scale, counter-cyclical capital investment, and relentless process engineering rather than through invention — is the inverse of the Silicon Valley software model, and it is just as foundational to modern computing. For the parallel rise of other Asian tech powers, see China’s Tech Industry and Japan’s Computing Industry.