The Day Samsung Burned Its Own Phones to Start Again

By Human Business Works

On March 9, 1995, workers gathered in the courtyard of Samsung’s Gumi factory in South Korea.

They were wearing headbands that said “Quality First.” In front of them was a large pile of products made by their own company: mobile phones, cordless phones, and fax machines.

Samsung’s chairman, Lee Kun-hee, had ordered them destroyed.

More than 2,000 employees watched as workers used hammers to break the products and threw them into a fire. The destruction was intended to make the company’s new quality standards impossible to ignore. According to a later account in Wired, some employees were weeping before the ceremony ended.

The products had already required materials, machines, time, and human labor. Now they were being smashed in front of the people whose work had helped produce them.

For Samsung, the scene became one of the most remembered moments in its history.

But the problems that brought everyone to the factory courtyard had begun long before that day.

Samsung had been making electronics for decades. The original Samsung business began in 1938 as a trading company, and Samsung Electronics was established in 1969. Over time, its products included televisions, refrigerators, washing machines, air conditioners, and other household electronics.

The company also entered the mobile-phone business. In 1988, it introduced the SH-100, its first handheld mobile phone made in South Korea.

Making phones, however, did not immediately make Samsung a leader in the industry.

By the early 1990s, the company was competing against established foreign manufacturers while trying to improve the quality and reputation of its own products. Samsung had experience in manufacturing and electronic components, but its consumer products were still often associated with lower prices rather than premium quality.

Lee wanted that to change.

In June 1993, during a meeting with Samsung executives in Frankfurt, Germany, he announced a broad management initiative focused on changing how the company operated. The message was that Samsung needed to improve its standards if it wanted to compete with the strongest manufacturers in the world.

The changes were not limited to phones.

Samsung’s own historical materials describe products that exposed problems in design and manufacturing: a video recorder with more components than competing models, a television that struggled to attract customers in an American store, and a washing machine with a lid that did not close properly.

These were the kinds of details that could be missed when a company measured success mainly by how much it produced.

A product could leave the factory and still disappoint the person who bought it.

The mobile-phone problem made that failure especially visible.

According to Wired, Lee had given Samsung wireless phones as New Year’s gifts in 1995. Complaints came back that some of them did not work properly.

The chairman had given people a product carrying his company’s name, and the product had failed them.

The Gumi ceremony followed that March.

The company’s official history records 150,000 phones and fax machines being gathered for destruction. Samsung later displayed examples of the destroyed telephone models in an exhibition about its management changes, making the event part of the story it told about its own past.

It was a severe way to communicate a change in standards.

The workers who had assembled the products were asked to watch them being rejected. The public nature of the destruction made the cost of poor quality visible, but it also placed that message on the people doing the work.

There is no need to imagine what every employee felt. The reported tears are enough to show that the event was not experienced as an ordinary factory exercise.

The company was asking its workers to understand that finished products were not necessarily acceptable products.

After the ceremony, the larger work of changing Samsung continued.

Quality could not be improved by destroying one pile of defective goods. It had to be built into the ordinary routines of design, manufacturing, testing, and inspection.

The people responsible for those routines had to make different decisions every day.

A component that did not fit correctly had to be noticed. A product that failed a test had to be rejected. A design that caused repeated problems had to be changed. The standards had to survive the pressure to produce more units and meet deadlines.

In 2005, Wired reported that Lee Ki-tae, who had managed the Gumi factory and later led Samsung’s mobile telecommunications division, still tested new phones by dropping them or throwing them against a wall. The magazine described an occasion when he drove a car over a handset and found that it continued working.

Those tests were dramatic, but they pointed toward a practical concern: how a phone would survive the treatment it received outside the factory.

A customer would not care how many units Samsung had produced if the one in their hand stopped working.

Samsung’s transformation also involved more than quality control. The company invested heavily in memory chips, displays, manufacturing technology, design, and research. It expanded internationally and changed parts of its business during the Asian financial crisis of the late 1990s.

The process was expensive and difficult. Jobs were lost, businesses were reorganized, and the company had to make choices about where it would invest.

The 1995 fire remained a symbol of the new standards, but it was only one part of that longer change.

Samsung’s phone business gradually became stronger.

By 2007, the company had become the world’s second-largest mobile-device manufacturer. Nokia still held the leading position, but Samsung was no longer a minor competitor trying to establish itself.

Then the phone market changed again.

Smartphones were becoming more important, and customers were beginning to expect large touchscreens, internet access, applications, and software that could do much more than make calls or send messages.

Samsung had to adapt to that change too.

In 2010, it introduced the first Galaxy S, an Android smartphone with a four-inch Super AMOLED display and a five-megapixel camera. The following year, the Galaxy S II continued the range with improvements in performance, display technology, and design.

Samsung was bringing together years of experience in hardware manufacturing with the growing Android software platform.

At the same time, Nokia was struggling with the move away from its older Symbian smartphone system. Its transition toward Microsoft’s Windows Phone platform took place while Apple and Android manufacturers were gaining customers.

The distance between Samsung and Nokia continued to narrow.

In April 2012, research firm Strategy Analytics reported that Samsung had overtaken Nokia in total mobile-phone shipments during the first quarter of the year. Samsung was estimated to have shipped 93.5 million handsets, compared with Nokia’s 82.7 million.

The figures marked the end of Nokia’s 14-year run as the world’s largest mobile-phone maker.

For Samsung, it was a milestone reached seventeen years after the Gumi ceremony.

The fire did not create Android. It did not design the Galaxy S, build Samsung’s semiconductor business, or make Nokia’s strategic decisions. Those developments belonged to different years and involved thousands of people across many parts of the company.

But the ceremony remained part of the history that connected Samsung’s earlier manufacturing problems with its later ambitions.

The company that had once struggled to convince customers of its quality had become a leading name in mobile phones.

For the employees who stood in the Gumi courtyard in 1995, that future was not yet visible.

There were defective products in front of them. There were hammers, a fire, and work that had already been done but could not be sold.

The next day, there would still be products to make.

The difficult part of starting again was not the destruction. It was returning to the factory and making sure the next phone deserved to leave it.