Nevertheless, one of Lee's sons was arrested and Lee was forced to donate a fertilizer plant to the government to win his release. Despite that and other problems, Samsung continued to flourish.
Shortly after Lee's son was arrested, Lee decided to break into the mass communication industry by launching a radio and television station, as well as by manufacturing televisions and electronic components through the Samsung Electronics division. The industry was dominated at the time by several U. Nevertheless, Lee was confident that Samsung could stake its claim on the local market and eventually become a global contender.
During the early s the company invested heavily, borrowed and coaxed technology from foreign competitors, and drew on its business and political connections to begin carving out a niche in the consumer electronics industry. In addition to televisions, Samsung branched out into other consumer electronics products and appliances. Samsung Electronics's gains during the s were achieved with the assistance of the national government. During the s and s Samsung and other Korean conglomerates struggled as the Rhee Sungman administration increasingly resorted to favoritism and corruption to maintain power.
Student revolts in the s finally forced Rhee into exile. The ruling party that emerged from the ensuing political fray was headed by military leader Park Chung-Hee.
His regime during the s and s was characterized by increasing centralization of power, both political and industrial, as his government was obsessed with economic growth and development. So, while Park was widely criticized for his authoritarian style, his government is credited with laying the foundation for South Korea's economic renaissance.
In order to rapidly develop the economy, Park identified key industries and large, profitable companies within them. The government worked with the companies, providing protection from competition and financial assistance as part of a series of five-year national economic growth plans. By concentrating power in the hands of a few giant companies the chaebols , Park reasoned, roadblocks would be minimized and efficiencies would result.
Samsung Electronics and the entire Samsung chaebol were beneficiaries of Rhee's policies. Several countries, including Japan, were barred from selling consumer electronics in South Korea, eliminating significant competition for Samsung. Furthermore, although Samsung Electronics was free to invest in overseas companies, foreign investors were forbidden to buy into Samsung. As a result, Samsung was able to quickly develop a thriving television and electronics division that controlled niches of the domestic market and even had an edge in some export arenas.
During the s and s Samsung Group created a number of electronics-related divisions, several of which were later grouped into a single entity known as Samsung Electronics Co.
Samsung Electron Devices Co. Samsung Electro-Mechanics Co. Samsung Corning Co. Rapid growth in those industries, combined with savvy management, allowed the combined Samsung Electronics Co.
Samsung's entry into the semiconductor business was pivotal for the company. Lee had determined in the mids that high-tech electronics was the growth industry of the future, and that Samsung was to be a major player. To that end, he formed Samsung Semiconductor and Telecommunications Co. To make up for a lack of technological expertise in South Korea, the South Korean government effectively required foreign telecommunications equipment manufacturers to hand over advanced semiconductor technology in return for access to the Korean market.
This proved crucial for Samsung, which obtained proprietary technology from Micron of the United States and Sharp of Japan in Utilizing its newly acquired knowledge, Samsung became the first Korean manufacturer of low-cost, relatively low-tech, kilobit dynamic random access memory DRAM chips.
Shortly after introducing its 64K chip, Samsung teamed up with some Korean competitors in a research project that was coordinated by the government Electronics and Telecommunications Research Institute. During the mid- and late s, Samsung parlayed knowledge from the venture to become a significant supplier of low-cost, commodity-like DRAM chips to computer and electronics manufacturers throughout the world.
Meanwhile, its other electronics operations continued to grow, both domestically and abroad. Samsung opened a television assembly plant in Portugal in to supply the European market with , units annually. Much of that growth was attributable to Samsung Electronics. Kun-Hee Lee recognized the importance of the electronics division and moved quickly to make it the centerpiece of the Samsung Group. To that end, he consolidated many of the Group's divisions and eliminated some operations.
He also introduced various initiatives designed to improve employee motivation and product quality. Kun-Hee Lee was credited with stepping up Samsung Electronics's partnering efforts with foreign companies as part of his goal to put Samsung at the forefront of semiconductor technology.
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