SEM CEO Choi Honored with Chung Jin-ki Award for transforming MLCC into one of SEM’ s mainstay materials and components
Samsung Electro-Mechanics (SEM) President & CEO Choi Chi-joon has grabbed the Chung Jin-ki Media & Culture Award 2012 Grand Prize for his leading role in the development of the multi-layer ceramic capacitor (MLCC).
Choi has been credited with transforming the MLCC business into one of SEM’ s value-added mainstay businesses. He has been climbing SEM’ s hierarchy for 27 years since he began his career at the company in 1991 and rose to SEM president last year.
Here is a look at MLCC, which is a type of electronic capacitor with ceramic dielectric, designed to ensure a stable flow of electric currents. The miniscule 0602 MLCC is enjoying rapidly growing market demand as the Galaxy S3 and the like are each fitted with 400 to 500 MLCCs, which are essential for PCs, TVs, and other electronic appliances.
Riding the boom of smartphones, MLCCs became the goose that laid the golden eggs by posting 1.5 trillion won in sales last year. SEM has risen to second place in the global MLCC market following Murata of Japan.
SEM was a latecomer in the MLCC segment. The subsidiary of the Samsung Group made an inroad into the MLCC business in 1986, when it had a meager bottom line: chalking up 100 million won in sales on a monthly basis for a loss of 200 million won. At that time, Choi was responsible for the development of dielectric power in use for MLCC at the Samsung Advanced Institute of Technology °™ a path he was destined to take when he began his career with the Samsung Group and a fate he has inevitably met.
He chose to go to the scene of an SEM plant with the mission of producing MLCC on his own with his team members. He experienced a lot of hardship, including the pile-up of faulty products being rejected by customers. Choi recalled, “We studied hard in theory, but lacked practical experiences, as we do in badeuk (go) games.” These were the bitterest times he endured as he was full of reflection on mistakes and failures to gain a wider understanding. For him, those problems seemed to serve as a paradoxically fortunate thing. Since his team could restart from scratch, he said, they were allowed to visit their rivals’ plants while sounding out possibilities of sharing technology. At that time, Japanese firms did not consider SEM as a rival.
Choi and his team began to turn things around in an amazing way about three or four years after struggling to pick up the pieces. In 1994, SEM began to raise its operating profit rate to double digits by stabilizing the manufacturing process. The Korean company made its mark in the palladium segment as the raw material for producing MLCCs prior to the shift into nickel: producing up to 300 million MLCCs per month in 1995.
But the success was short-lived for Choi. He quit SEM in the late 1995 to take over management of a company his late father had founded and run. While running his father’ s company, he retained the status of technology adviser for SEM for five years following his departure.
SEM seemed to cruise to success as the company posted profits and expanded its operations to Busan, Tianjin, China, and the Philippines until 2000 when it chalked up 500 billion won in sales. The success was actually just a mirage. SEM was deluged with a stream of orders, riding on the millennium Y2K bug, but management efficiency and R&D took a back seat. SEM was soon faced with another dark storm: the MLCC segment began to flounder as the millennium bug boom was over.
In 2002, Choi came back to SEM as the chief of SEM’ s MLCC business team. Choi recalled the hardest moments when he launched the MLCC business with his team members. He chose to do it differently this time °™ focus on technology development for three years instead of pursuing conventional short-term performance results. His urgent task was to lower the defect rate and raise the quality to world-class levels rather than only raising SEM’ s market share. The period was said to be the darkest one for the MLCC segment. Choi said, “I learned something while running my father’ s company: it was destined to fail, regardless of time, one year later or 10 years later, so I decided to build a foundation, returning to the basics for a longer-term perspective, but not to turning to short-term performances.”
Finally in 2005, SEM achieved a marvelous milestone: succeeding in doubling the capacity of MLCCs of the same size for the first time in the world. SEM is on a roll as the company has maintained explosive growth thanks to the boom in sales of mobile gadgets. SEM has consistently released new products capable of raising the capacity of MLCCs every two years.
SEM’ s success is owed to Choi’ s decision to focus on the mobile segment, an area SEM’ s rivals have tended to overlook and one in which mobile phones and tablet PCs are short-lived and the markets are rapidly changing. Japanese firms have begun to regard SEM cautiously, as the former underdog, which placed eight in the world with a 3 percent market share in 2001, jumped to fourth place with an 11 percent share in 2008 and is now in second place with a 20 percent share in 2011.