Samsung has been facing strong headwinds for a few years now. First, it was the supply glut in the memory market, which significantly reduced profits. That was followed by its inability to beat SK Hynix and become the frontrunner for HBM3E chips, potentially leading to billions in lost revenue.Summarize in one-click with Galaxy AI
To make matters worse, Samsung Foundry hasn't been doing great either. It's proving to be more of a money pit for the conglomerate. There's been a lot of talk about Samsung needing a cultural shift, and while the company is reportedly debating one internally, this won't be the first time an introspective exercise has been conducted without any significant change.
According to reports out of South Korea, Samsung Electronics semiconductor head Jun Young-hyun has lined up several executive meetings to discuss cultural shifts before the company's annual staffing rotations due towards the end of this year. He already met with executives from the memory business team last week where high-bandwidth memory products remained a key topic of discussion.
Similar meetings may take place with other divisions. Some industry watchers believe that this may result in personnel changes. There's the expectation that senior leaders in these divisions who have held their posts for several years may be rotated.
One of the reasons is said to be Samsung's wish to address the shortcomings of its corporate culture, which is reportedly dogged by growing bureaucracy that perhaps doesn't give employees the sense that open communication is welcome.
Samsung's rigid culture isn't a new problem
Talk about a rigid internal culture is nothing new. We have been covering it since 2015. A “culture innovation” was launched in 2016, spearheaded by the top boss Jay Y. Lee, to get rid of the rigid top-down management culture and promote more open communication.
It's unclear to what extent these changes helped because five years later in 2021, the company again committed to a cultural shift, opting for a management style that would be similar to startups and US-based companies.
Some of the biggest investors in Samsung Electronics started voicing concerns about Samsung's rigid corporate culture in 2022. Engineers cited in subsequent reports revealed that the company's divisions were blaming each other for their struggles and there was a realization that the company was “slipping on all aspects of technology development.”
Slipped it most certainly has. Despite being quick to start production on its advanced 3nm nodes, the yields are reportedly so poor that Samsung Foundry can't even manufacture the Exynos 2500 at scale, which will reportedly force the mobile division to go Snapdragon-only for the Galaxy S25 series.
The memory division has still not been able to get its HBM3E modules up to NVIDIA's quality standards, potentially delaying billions in revenue and leaving the field open for SK Hynix to capitalize on the booming demand for high-bandwidth memory.
Perhaps previous exercises to fix the issues didn't get the desired results. Otherwise, Jun Young-hyun, who took charge of the semiconductor division in 2024, wouldn't have torn employees a new one in a memo. The memo specifically pointed out cultural problems related to communication between departments, calling on employees to stop “hiding or avoiding problems.”
A report earlier this year had revealed how upper management would often shoot down bold ideas from subordinates simply because there was no precedent.
Samsung's may want to get its culture-fixing attempt right this time
On the other hand, some Samsung engineers who went over to rival memory maker SK Hynix experienced a stark difference in culture. SK Hynix is quick to adopt new ideas since that's precisely what it needed to do when faced with a giant competitor like Samsung. The results are evident: SK Hynix has managed to pull ahead of Samsung in the lucrative HBM3E market while the Suwon-based company struggles to catch up.
As recently as last month, Samsung again vowed to revisit its “organizational culture and work methods and immediately fix what needs to be fixed,” adding that if a problem is uncovered, the company “expose it and have a heated discussion to improve it.”
It's evident that there has been a realization at Samsung about the culture issues. And even though the company has been public about making efforts to address it for the better part of a decade, it doesn't seem to have made the kind of progress that would bring back the wind in its sails.
With yet another proclamation to fix things and become a leaner organization unburdened by a rigid legacy that, in all fairness, brought incredible success for the conglomerate, Samsung now finds itself in a decisive stage as it stares down the barrel of several existential crises.
Outsiders may choose to be cautiously optimistic that this latest effort might bring about some meaningful change, but it's entirely possible that insiders are pessimistic. Samsung's been talking about this for more than a decade and yet the previous attempts at a cultural shift have largely failed. Here's hoping it follows through this time around.
