Samsung Electronics has a business dynamic that baffles outsiders, even within South Korea, but one that makes perfect sense internally. Here's how it works: Every business is on its own. Boundaries are respected between them; they can cooperate, negotiate, or, on rarer occasions, compete. It's all fair game, but it's more contract than dialogue. It has three CEOs[1] -- in mobile, consumer electronics, and semiconductors. These are then subdivided further. For example, Device Solutions (DS), the conglomerate's semiconductor business, is divided into Memory, Foundry, and System LSI, each with its own president.
The company is not shy about offloading businesses that don't meet its high performance standards, can't scale, or lack long-term vision. It sold its printer business[2] to HP in 2016. It killed its digital camera division last year. System LSI, which makes logic chips, and Foundry, which contract-makes them for both Samsung and other firms, were under one roof up until May last year. Despite the advantages of keeping them together -- Foundry made most of System LSI's products for use mostly by Samsung itself -- the conglomerate split them up.
In the first quarter of the year, Samsung's semiconductor business posted 20.78 trillion won in revenue[3] -- 17.33 trillion won from memory while System LSI and Foundry together contributed the rest. Profits were negligible outside of memory's record-high; the two other businesses are likely in the red, though the company declined to comment. Taking Samsung's culture into account, then, the implications of the split are clear. Despite their underperformance, the conglomerate sees a long-term vision in System LSI, and wants it to stand on its own two feet.
"It's a forward-looking direction for us," said Inyup Kang, president and head of Samsung