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Why Did SK Hynix Recruit Former Samsung Executives?
New Management Lineup
Why Did SK Hynix Recruit Former Samsung Executives?
  • By matthew
  • February 6, 2014, 09:54
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The SK Hynix plant in Icheon City.
The SK Hynix plant in Icheon City.

 

SK Hynix is going to push ahead with its plan to revamp personnel management, its organizational structure, and its business areas to break from its heavy reliance on the memory chip-making business. It means that the world’s second-largest maker of memory chips aims to grow as an integrated device manufacturer (IDM) that carries out memory products, system semiconductors, and IC foundry businesses just like Samsung.

According to sources in the semiconductor industry on February 4, the Korean chip-maker recently hired Suh Kwang-pyuk, an ex-Samsung official, as the president fully responsible for future technology and strategy. President Suh began his career at global chipmaker Intel and worked his way in 2000 up to the head researcher for system-on-chip (SOC) and the head of the foundry business at the System LSI division of Samsung Electronics. His recruitment as a specialist in non-memory chips can be interpreted as the firm’s intention to create synergy at SK Group.

In addition, SK Group appointed former President Lim Hyung-kyu of Samsung Electronics’ System LSI division as Vice Chairman in charge of creating a new cash cow in the information communication technology (ICT) sector, and making broader plans for long-term growth. The Vice Chairman is the same age as Woo Nam-suk, president of Samsung’s System LSI division, and considered to be one of the leading experts on the system semiconductor field in the country.

President Oh Se-young, who joined SK Hynix last year, will continue to run the memory business. He also worked at Samsung Electronics as an expert in semiconductors. When working at Samsung Semiconductor, he was selected as a Samsung Fellow, the highest recognition at Samsung.

With these appointments, three former Samsung officials are going to be responsible for the semiconductor business, with Lim as a control tower, Suh as the head of non-memory business, and Oh as the head of the memory business.

The reason for SK Hynix’s active involvement in non-memory fields can be interpreted to mean that the memory business is greatly affected by the global economy. Last year, the memory chip maker achieved its highest-ever annual figures for sales (14.165 trillion won, US$13.131 billion) and operating profit (3.38 trillion won, US$3.13 billion), owing to soaring DRAM prices caused by an increase in demand. However, the company’s performance after the first half of this year is unclear, due to the saturation of the local mobile market.

The non-memory business, on the other hand, is more likely to grow, because of its various uses in PCs, mobile devices, cars, and electronic and precision equipment. World Semiconductor Trade Statistics (WSTS) estimates that the global NAND flash memory market will grow 0.5 percent this year, while the global system semiconductor market will grow 4.6 percent.

In particular, the electric/electronic sub-assembly (ESA) market is cited as a new blue ocean, since the market is likely to grow every year. Consulting firm McKinsey & Company predicts that the global ESA market will equal US$200 billion (212 trillion won) in 2015. Currently, SK Hynix is running a system semiconductor business mainly in the field of CMOS image sensors and SSD controller chips. The company is reportedly going to develop application processors in partnership with its holding company, SK Telecom.

The Korean chip manufacturer is expected to assign President Suh to revitalize the foundry business, since the sector plays an integral part in departmentalizing the semiconductor manufacturing process and increasing production capacity. The foundry business merely made up 4 percent of the company’s total sales last year.

If SK Hynix runs memory, non-memory, and foundry businesses all together, it will be able to be reborn as an IDM. Furthermore, its position in the group is likely to be strengthened even more. The firm represents 8 percent of the SK Group’s overall sales, and the group’s total sales in 2012 amounted to 158 trillion won (US$146 billion).