SAMSUNG GROUP : Comprehensive Encyclopedia

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History

1950s - 1980s

The 1990s and present

The 1990s saw Samsung rise as an international corporation. Not only did it acquire a number of businesses abroad, but also began leading the way in certain electronic components. Samsung's construction branch was awarded the contract to build one of the two Petronas Towers in Malaysia in September 1993 and the Burj Dubai in 2004, set to be tallest structure ever created by mankind.

Samsung survived the Asian financial crisis of 1997-98 relatively unharmed compared to other major Korean firms, however, Samsung Motor Co, a $5 billion venture was sold to Renault at a staggering loss. Most importantly, Samsung Electronics (SEC) was officially spun-off the Samsung Group and had become to dominate the group, Korea, and the worldwide semiconductor business, even surpassing worldwide leader Intel in investment for the 2005 fiscal year. Samsung's brand strength has improved impressively in the last few years, despite an environment of scandal and political intrigue.

Considered a strong competitor by Japan, Silicon Valley, Taiwan, and domestically, Samsung Electronics (SEC) expanded production dramatically to become the world's largest manufacturer of DRAM, refrigerators, flash memory, dvd-combo players, and aims to double sales and become the top manufacturer of 20 products globally by 2010. It is now one of the world's leading manufacturers in plasma displays and next generation mobile phones. Due to their involvement in many fields, Samsung is involved in seemingly never-ending legal controversies, such as the one over patent infringements with companies such as Fujitsu who claim to have created plasma display technology first. Samsung has also faced controversy in Korea for its policies towards workers, described by some as anti-worker, although such claims are widely disputed.

Samsung Electronics saw record profits and revenue in 2004, and in 2005, overtook Sony as one of the worlds most valuable brands, and is now ranked #20 in the world.

On November 30, 2005 Samsung pleaded guilty to a charge it participated in a worldwide DRAM price fixing conspiracy during 1999-2002 that damaged competition and raised PC prices. In a deal with prosecutors, Samsung Electronics Co. Ltd. and its U.S. subsidiary, Samsung Semiconductor Inc., are to pay $300 million fine. As a result of this investigation, Hynix was to pay $185 million in 2005, Infineon: $160 million in 2004. Micron Technology, the US firm who initiated the case, cooperated with prosecutors and no fine is expected. Recently, a severely weakened Micron has teamed up with Intel to take on Samsung in the lucrative NAND flash business, although Intel has no desire to fully engage Samsung after Samsung drove Intel out of the flash business.

Markets

Currently, Samsung has sixteen products that have dominated the world’s market share, including: DRAM, color cathode-ray tube TVs (CPT, CDT), SRAM, TFT-LCD glass substrates, TFT-LCD, STN-LCD, tuner, CDMA handset, color television (CTV), monitor, flash memory, LCD Driver IC (LDI), PDP module, PCB for handheld (mobile phone plates), Flame Retardant ABS, and Dimethyl Formamide (DMF).

According to Interbrand and BusinessWeek, Samsung’s brand value ranked 43rd (USD 5.2billion) in 2000, 42nd (USD 6.4 billion) in 2001, 34th (USD 8.3 billion) in 2002, 25th (USD 10.8 billion) in 2003, 21st (USD 12.5 billion) in 2004, and 20th (14.9 billion) in 2005 among top global companies.

In terms of export that directly contributes to the Korean economy, Samsung took up 18.1% of the national export amount with USD 31.2 billion in 2000 and 20.7% with USD 52.7 billion in 2004. In addition, the amount of tax that Samsung paid to the Korean government in 1003 was KRW 6.5 trillion, which took up 6.3% of the national tax.

The market value of Samsung in 1997 reached KRW 7.3 trillion in 1997, which amounted to 10.3% of the Korean market but this figure increased to KRW 90.8 trillion taking up 22.4% in 2004.

Moreover, the annual net profit of Samsung marked KRW 5.8 trillion in 2001, KRW 11.7 trillion in 2002, KRW 7.4 trillion in 2003, and KRW 15.7 trillion in 2004, showing forth a steady increase.

Liabilities of Samsung that prove the strong foothold of the company have been continuously dropping from 104% in 2000, 78% in 2001, 68% in 2002, 56% in 2003, and 51% in 2004.

In order to enhance the working environment and build a strong and trustworthy foundation, the semiconductor sector of Samsung Electronics has been conducting a ‘Great Workplace Program’ called GWP since 1998. Then, in 2003, GWP has spread throughout the entire Samsung Group as Samsung Fire and Marine Insurance, Samsung SDI, Samsung Everland, Samsung Corporation, Cheil Industries, Samsung Networks, and others started to apply its core principles. In 2006, 9 subsidiary companies of Samsung Electronics, 80 overseas branches, and 130 overseas business sectors have reported that they are actively applying the GWP.

Dramatic surge in Net Profits starting in the late 90's: $2.2Bil (1999), $7.3Bil (2000), $8.9Bil (2002), $11.8Bil (2004).

Samsung's Brand Value conducted by Interbrand of the world's top 100 brands: $6.4Bil (2001), $8.3Bil(2002), $10.8Bil(2003), $12.5Bil(2004), $14.9Bil(2005).

Market Capitalization (Ratio to the total market value of all Korean listed stocks):A dramatic increase from 7.3 trillion KRW, 10.3% of the total national listing value in 1997. At the end of 2004 national listing value in 22.4%.

Samsung's Annual Profits Growth: $4.5Bil (2001), $8.9Bil (2002), $5.6Bil (2003), $11.8Bil (2004) and Debt-to-Equity Ratio Decrease: 104% (2000), 78% (2001), 68% (2002), 56% (2003), 51% (2004).

On May 24, 1966, Samsung was detected by Busan customs smuggling 2259 sacks(55 tons) of saccharin, an artificial sweetener widely used in South Korea before sugar. Samsung imported it as construction materials for a newly constructed factory. Busan customs confiscated the remaining 1059 sacks of it and fined 20 million Won^{[citation needed]}.

Legitimate inheritance but expediential ways

In October 1996, Samsung Everland, the biggest amusement in South Korea, issued 1.28 million convertible bonds ('CBs'), each valued at 7,700 Won - considerably cheaper than the company's stock price at the time of 100,000 Won. All shareholders were not given the right to buy these bonds, with the exception of the son and daughters of chairman Lee Kun-hee. Within a short time, the children converted their bonds into stocks, thus becoming the major shareholders of Samsung Everland. This simple process garnered profits of 120 billion Won (about 120 million dollars). In March 24, 1997, Samsung Electronics used the same method, issuing bonds of 60 billion Won to generate another 45 billion Won (about 45 million dollars) of profits for the family. On February 26, 1999, instead of convertible bonds, Samsung SDS issued not convertible bonds but Bonds with Warrants (BWs) at the undervalued price of 7,150 Won. At that time the exact stock price was not known as Samsung SDS was not listed, however, indications are that the stock traded at 54,000-59,000 Won on the Over The Counter market.

The methods outlined above allowed the children of Lee Kun-hee to become the richest in South Korea, as well as successfully assume control of the Samsung Group.

Circular investment

The relations of Samsung companies are very complicated. According to the Financial Supervisory Service of South Korea, Samsung Everland owns 13.3% of Samsung Life Insurance; Samsung Life Insurance holds 34.5% of Samsung Card and 7.2% of Samsung Electronics, as well as more of other Samsung companies; Samsung Electronics in turns keeps 46.0% of Samsung Card and stocks of other Samsung companies; and finally, Samsung Card holds 25.6% of Samsung Everland.

The family of Lee Kun-hee owns 40% of Samsung Everland, whilst Samsung Card holds 25.6%, and related people have another 30%. Thus it is thought that Lee controls 95% of Samsung Everland. Control of one company, through the circular investment, enables the Lee family to control other Samsung companies despite having only relatively minor holdings.

Lawsuits against the company

A Samsung spokesman "guessed that the film makers take issue with DVD-HD841, which Samsung sold in the United States between June and October 2004. If so, I do not know why the movie studios are complaining about the products, of which production was brought to an end more than 15 months ago. We stopped manufacturing the model after concerns erupted that its copy-protection features can be circumvented by sophisticated users."

Sports sponsorship

Samsung signed the second biggest sponsorship deal in English football history with Premiership Champions Chelsea FC. The five year deal is worth an estimated £50 million.

Subsidiaries of the Samsung Group

Electronics industries

Machinery and heavy industries

Chemical industries

Financial services

Engineering & construction

Entertainment

Others

SAMSUNG GROUP

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