to compete with, and even best, Intel and Fairchild Semiconductor, thanks
to long-term government backing. Samsung would be a distant third mover
in the market.
“The company made semiconductors only in name,” B.C.’s third son,
Lee Kun-hee, wrote later. “The reality was that they were essentially able to
make little more than transistors,” the basic parts used in microprocessors
for calculators and computers, but with little added value of their own.
Samsung executives stepped in to reassure visiting American diplomats
of the soundness of the operation. And the diplomats were convinced.
“Everything appears well-organized and under control,” a diplomat cabled
back to Washington.
Unable to pull Korea Semiconductor out of the red, the remaining
partner offered to sell his stake. Lee Kun-hee, convinced of the long-term
importance of chipsets, agreed to finance part of the deal with his own
money.
The shaky new partnership was renamed Samsung Semiconductor.
But the timing was ominous for a new venture. Two years later, in 1979,
President Park’s head of intelligence shot and killed the dictator after the
two had a heated argument over dinner. In the resulting chaos, the military
massacred hundreds of prodemocracy protesters in the city of Gwangju in
May 1980. And then a brutish general named Chun Doo-hwan won a rigged
election and seized B.C.’s broadcasting station, TBC.
B.C. looked for ways for Samsung to bounce back from the political
turmoil. Hyundai founder Chung Ju-yung had won favor with the new
government as a bastion of heavy industry and had received an honorary
doctorate at George Washington University. B.C., eager to best him,
lobbied successfully through a South Korean politician to receive an
honorary doctorate at Boston University.
Visiting the United States in 1982 to receive his honorary degree, B.C.
toured the semiconductor assembly lines of IBM, GE, and Hewlett-
Packard. Their ingenuity dazzled him. And a grim realization hit home.
“We are too late,” he told his son.
B.C. was prepared to abandon semiconductors. But under increasing
pressure from Hyundai, which had begun manufacturing semiconductors,
too, he decided Samsung needed to fight back. On the plane home from
Boston, his son tried to persuade him that semiconductors were the
solution.