Samsung Electronics secured the highest market capitalization as it entered the 2000s.
While the group's overall ranking in Korea's business world was still second to Taewoo Group, Samsung Electronics was the number one company when considered on its own.
Samsung was a powerhouse, rivaling entire conglomerates.
There were two vice chairmen, five presidents, and more than ten executive vice presidents among the company's leadership, all of whom wielded tremendous power. Heated debates were underway in the conference room.
"Are you suggesting we sacrifice the semiconductor division just to save the mobile division? Apple is set to purchase chips for three million devices this time. What happens if we antagonize our client?"
"When did we ever antagonize our client? The WIPI regulation was decided by the Broadcasting Commission. Samsung Electronics has nothing to do with it whatsoever."
"Who's going to buy that? Even I don't believe it—do you think Apple will? Rumors are spreading not only in Korea but all the way to the States that we're teaming up with telecom companies to block the iPhone's launch in Korea."
The executives from both the semiconductor and mobile divisions raised their voices.
Tempers were flaring to the point that a fistfight seemed imminent, prompting Vice Chairman Jung Hyun-woo to intervene.
"Let's calm down. We need to find a win-win between the mobile and semiconductor divisions."
"In the face of the Super 301 threat from the U.S., there's no way for both divisions to profit simultaneously."
"The U.S. has threatened us with Super 301 more than once, but it's never actually been invoked. It's just another pressure tactic."
Vice Chairman Jung pressed his temples.
The situation was more than just complicated—it was a tangled mess.
Both the mobile and semiconductor divisions were the top revenue generators at Samsung Electronics, so he couldn't take sides.
As soon as the vice chairman stopped mediating, the argument broke out again.
The mobile division unleashed a barrage of strong remarks.
"Let's be honest. How is the semiconductor division staying afloat? This quarter alone, they lost over 200 billion won. It's the sales from mobile phones that are covering those losses!"
"So, are you saying we should just kill off the semiconductor division altogether? For us to turn a profit, we need to bring in more clients! But if the mobile division drives those clients away, what then?"
The situation was deteriorating rapidly.
The voices of each division head only grew louder.
At that moment, screeech! The conference room door swung open, and someone entered.
"Why are you all shouting as if this is a marketplace?"
"Ch-Chairman! We're sorry."
It was Chairman Oh Hee-gun.
If Jang Young-joo led Hyundai Group, Samsung Group was led by Oh Hee-gun.
Having survived an internal power struggle, Oh Hee-gun had risen to the top of Samsung Group. His keen management skills had propelled Samsung to second place in the corporate world.
"What are you hoping to accomplish by making things so complicated that the U.S. is threatening us with Super 301? And I hear Apple is threatening to terminate their contract."
"They said they can't do business with a company that antagonizes its clients."
"President Lee, let me ask you: Is Samsung's mobile phone so uncompetitive that you must go as far as blocking the iPhone's launch in Korea?"
"Absolutely not. Samsung's phones are the best in the world."
"Then why are you trying to block the iPhone's launch in Korea? Is it just to keep your market share?"
"The iPhone is unlike any phone we've ever seen, so we need time to figure it out. We're only trying to buy ourselves that time."
Telling lies in front of Chairman Oh Hee-gun was pointless.
President Lee of the mobile division laid his true intentions bare.
"I understand your reasoning. But if blocking the iPhone's launch in Korea means we can't sell our phones in the U.S., what's the point?"
"If you're worried about Super 301, there's no need. We've already sent lobbyists to the White House, the Senate, and the House of Representatives."
"Tsk, tsk. What politician would go against their own country's interests? No matter how much you pay those lobbyists, there are things money simply can't buy. Don't you see that?"
Chairman Oh Hee-gun was already well aware of the situation in the United States.
He had gathered information through his own network and realized that lobbying wouldn't work this time.
"It may go against their national interests, but I still believe American issues can be resolved through lobbying."
"Do you really think the telecom cartel has that much money? Are you confident you can outspend Wall Street in lobbying?"
"When you say Wall Street, do you mean the American investment firms?"
"Do you not know who owns Apple? The majority of its shares are held by Wall Street investment companies. And those firms are the biggest spenders in Washington politics. Are you confident you can take them on and win?"
"..."
Oh Hee-gun clicked his tongue.
President Lee of the mobile division bowed his head at that sound.
"If you truly believe you can win, then I'll support you. But remember, if you lose, it could bankrupt Samsung Electronics. This isn't just about Samsung—if we fail, the whole nation might fall."
"I'm sorry. I didn't think it through."
"Tsk, tsk. You tried to deal with American politicians the same way as in Korea, and look at the mess we're in."
Chairman Oh turned away coldly.
He then addressed the semiconductor division executive, who had been waiting quietly.
"If we sign a new contract with Apple, can that solve our deficit problem?"
"We can't eliminate the deficit completely, but we can reduce it."
"But is Apple really able to make iPhones without using Samsung's semiconductors? If our chips are truly essential, the balance of power could flip."
"They can produce iPhones using chips from Taewoo Semiconductors and Japanese companies. Of course, there would be performance and cost issues, but nothing that would make production impossible."
Although Samsung Electronics led the semiconductor market, the gap with other companies wasn't that wide.
"There's no point debating further. Move to withdraw the WIPI regulation."
"But Chairman, we've already made promises to several companies, especially the telecom operators. They'll push back hard."
"We may end up scrapping the mobile business entirely, so why are you worrying about domestic telecoms now?"
In a sense, telecom and mobile companies were in something of a vertical relationship.
Since phones could only be sold through telecom providers, the carriers were often seen as the ones holding the power.
But that didn't mean Samsung Electronics was merely subordinate. If anything, it was a "super subordinate"—indispensable.
The telecom companies also depended on the timely supply of Samsung phones; if deliveries failed, they would suffer enormous losses, so they couldn't ignore Samsung either.
"Deal with this before rumors start flying that the nation will collapse over Super 301."
"Understood. I'll take action as quickly as possible."
***
Two days later.
The chief strategy officer arrived with extremely welcome news.
"The Broadcasting Commission has announced a postponement of the mandatory WIPI installation regulation."
"So, to save face, they've called it a postponement rather than an outright abolishment."
"In name it's a postponement, but in reality, you can consider it nearly abolished."
"Does that mean we can launch the iPhone starting today?"
"Yes. As soon as you give the order, we can start selling iPhones in electronics stores right away."
"Then start the sales immediately."
Whenever a new product was launched, we'd normally conduct a massive ad campaign before release.
We had already shot various versions of iPhone ads, but due to the WIPI complications, we hadn't been able to air them.
Now that issue was resolved.
Ordinarily, it would make sense to spend a few days running ads before opening sales.
But, thanks to the news and newspapers creating so much media buzz, there was no longer any need.
"We'll begin selling iPhones in electronics stores the moment they open!"
The strategy chief leapt into action, restarting the long-delayed iPhone ads and notifying stores nationwide to begin sales.
After a hectic morning, the strategy chief found me just before lunchtime.
"Vice Chairman! We have a situation."
"What is it this time? Don't tell me the telecom cartel is causing trouble again?"
"No, that's not it. The initial stock has already run out."
"How is that possible? We brought in one hundred thousand units for the launch. It's hard to believe they could all sell out in half a day."
"Technically, only twenty thousand have actually been sold, but over thirty thousand customers have pre-ordered. Even if this pace keeps up at half the current rate, we'll be out of launch stock within the week."
I'd expected strong demand—just not quite at this level.
The reaction was far hotter than I'd anticipated, partially thanks to the telecom cartel.
The iPhone launch, combined with the Super 301 headline frenzy, got massive media exposure.
Intense local promotions at stores and around university areas led to a flood of customers from day one.
"Contact Apple headquarters and request a supply increase. Tell them we'll pick up the stock directly from the factory in China."
"We already contacted them. But even in the U.S., supplies are tight, so they said they can't provide a large quantity."
"They're planning to launch in the European market soon, and now there's already a shortage."
"Apple headquarters is reportedly on emergency alert because of the supply shortage."
There was no problem with parts availability.
The only issue was the small scale of the assembly factories, limiting production capacity.
"Hmm, we can't just wait blindly. Can Taewoo Electronics produce iPhones?"
"If we use their small-product assembly plants, it's possible. Plus, we can dispatch our staff to Taewoo's mobile phone division factories, which Apple has acquired, for production."
"Then do it. We have to take full responsibility for meeting Korea's demand without shortages."
"Using Taewoo's factory will solve the supply problem, but the unit cost won't be competitive."
The assembly plant in China was built because of labor costs.
Producing in Korea would naturally cause unit costs to rise.
However, since iPhones are already sold at high prices, we couldn't afford to increase costs further.
"Even if we take a small loss on our share, we must meet production quotas. That's the only way Taewoo Telecom's market share can grow."
"I'll start negotiations with Taewoo Electronics immediately."
Taewoo Telecom had exclusive rights to sell iPhones.
So, the more iPhones sold, the more customers Taewoo Telecom would gain.
There was also a strong chance that customers from other carriers would switch to Taewoo.
This wasn't a losing business by any means.
Even if unit costs increased, the larger profits elsewhere made securing supply essential.