Korean Economy News
Samsung Elec chief holds emergency meeting with key execs amid Japan trade woes
2019-08-06


Kim Gyu-sik and Kim Hyo-jin



The chief of Samsung Electronics rounded up senior executives for another emergency meeting as the world’s largest chipmaker counters multiple whammies from the memory industry downturn to supply chain disruptions from Japanese export curbs.

Jay Y. Lee, the vice chairman and heir apparent of the South Korean tech giant, convened an emergency meeting Monday with the eight heads of Samsung Electronics business units and key subsidiaries, including Samsung Display, Samsung Electro-Mechanics and Samsung SDI, to discuss future actions in response to Tokyo’s deepening trade dispute with Seoul.

“We must combat this crisis. We must up tensions, but not fear,” Lee said, according to those who were present at the meeting. “We must find opportunities in the crisis for a leap into the future.”

Japan last Friday stripped Korea of its fast-track export status, a move that can lead to delays in customs clearance for thousands of commodities and technologies falling under the dual-purpose category of both military and civilian uses. Tokyo has yet to specify the new targets, but they could include silicon wafers and circuit boards, whose supply shortage could halt fab activities in Korea.

The move is an extension from export curbs on three high-tech materials used in production of chips and display panels, largely supplied by Korean names. Samsung Electronics and its smaller domestic rival SK Hynix are responsible for 60 percent of the world’s memory production. LG and Samsung Display dominate the OLED panel market.

Japan cited national security concerns as the reason behind the export controls, saying Korean companies mismanaged the chemicals with potential military applications. But Korean officials slammed the move as retaliation for Korean court rulings that ordered Japanese companies to compensate victims of forced wartime labor during the Japanese colonial rule from 1910 to 1945.

Top management of Samsung’s semiconductor and electronics units are said to have given up their summer holidays in the face of mounting business risks.

Lee plans to tour the main company sites to inspect the overall supply chain, including the memory fab in Pyeongtaek, the system LSI and foundry lines in Kiheung, the chip development, assembly and assessment facilities in Onyang and Cheonan, and Samsung Display’s operations at the Tangjeong complex.

Samsung Electronics saw its operating profit in the second quarter more than halved from a year earlier as the memory chip glut continued to drive down prices. Operating profit of its biggest business, semiconductors, fell to its lowest since the third quarter of 2016, tumbling 71 percent on year.

Despite announcements of output cuts from other chip rivals, the world’s largest memory chipmaker stressed it was not considering any “artificial decrease in wafer input” but that it would “operate lines flexibly” in response to market changes.



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