March of the Samsung Men
IN 1974 SAMSUNG CEO Jin-ku (J.K.) Kang got a call from a California
entrepreneur named Joseph Sudduth, who told him about the financial
troubles at Korea Semiconductor, a new joint venture set up by Sudduth
and a Korean businessman.
The U.S. State Department was watching Korea Semiconductor’s
precarious financial situation closely, worried about the fallout of a default,
since projects like this had loans from the U.S. government. They were
believed to be in the national interests of both the United States and South
Korea, a means to kick-start the sluggish Korean economy. With the OPEC
oil embargo under way, it was clear that the United States and Korea
needed to build new value-added industries that depended on highly skilled
workers and not on natural resources like petroleum. Semiconductors were
a good bet. They were an essential technology behind the Apollo space
shuttles sent to the moon and in the laser-guided missiles deployed in the
Vietnam War.
J.K. saw an opportunity. “I had been thinking that an electronics
company without semiconductors was like a car without an engine,” he
wrote. With approval from B.C., Samsung bought Sudduth’s half of the
company.
Samsung managers warned against the acquisition. The chipsets were
expensive to produce and incredibly risky. The semiconductor industry,
notoriously unstable, required huge investments and years to recoup one’s
money, and it would force Samsung to grapple with chaotic price
fluctuations. Success in semiconductors required a grand vision and long-
term direction.
The industry leaders, especially the Japanese, had a remarkable ability