Samsung Electronics Co Ltd will merge its mobile and consumer electronics divisions, naming new co-chief executives in the biggest reshuffle since 2017 to “simplify its structure and focus on the logic chip business”, the company said on Tuesday.
After Vice Chairman Jay Y Lee was paroled from a bribery sentence in August, the broad move is the latest evidence of centralised change at the world’s largest memory chip and smartphone maker.
Two co-chief executives, instead of three, will lead the South Korean firm as it pivots on the two business pillars of chips and consumer devices, including smartphones, to help lead the next phase of growth and boost competitiveness.
Han Jong-hee, the leader of the visual display business, has been appointed to vice chairman and co-CEO and will supervise the newly combined division covering mobile and consumer electronics and continue to run the TV business. Han rose through Samsung’s visual display division ranks despite having no prior expertise with mobile. Analysts are divided into what kinds of reforms or divisions of labour to expect under Han.
Kyung Kye-Hyun, CEO of Samsung Electro-Mechanics, has been chosen co-CEO of Samsung Electronics and will be in charge of the chip and components division. The newly amalgamated companies are of varying sizes. In the July-September quarter, the mobile company earned KRW 3.36 trillion (approximately Rs 21,400 crores) in operating profit, compared to 760 billion won in consumer electronics.
Samsung, whose Galaxy flagship brand helped it become the world’s biggest smartphone maker by volume, is seeking to revive slowing mobile growth, whose profit contribution shrank to 21 per cent last quarter from nearly 70 per cent at its peak in the early 2010s.
Instead, its component business, led by chips, has become the most profitable, helped by a boom in data storage and a recent shortage of global semiconductor supplies.
The business generated nearly three-quarters of Samsung’s 15.8 trillion won ($13.4 billion) operating profit last quarter.
“In the long term, the biggest challenge is forming a platform of Samsung’s own,” said Lee Jae-yun, an analyst at Yuanta Securities Korea.
“Those businesses have to keep increasing connectivity between devices, but so far it hasn’t been able to create a lasting platform with presence.”
More immediate problems are a shortage of chip supplies, rising raw material prices, logistics difficulties, and competition from Apple Inc and Chinese rivals amid concerns about a slowing mobile market, analysts said.
Other high-profile promotions included naming as vice-chairman Chung Hyun-ho, the head of a “task force” that analysts said co-ordinates decision-making in Samsung Electronics and affiliates, and which media have said works closely with Lee.
“There may be more prompt execution of funds or decision-making,” said Kim Sun-woo, an analyst at Meritz Securities.
The group is focusing on areas from semiconductors, artificial intelligence and robotics to biopharmaceuticals, with plans to invest 240 trillion won ($206 billion) in these areas over the next three years.
Group flagship Samsung Electronics aims to overtake TSMC to become No 1 in chip contract manufacturing by 2030 by investing about $150 billion in logic chip businesses, including foundries.
Late last month, Samsung chose the US city of Taylor in Texas for a planned $17-billion chip plant after months of deliberation, coinciding with Lee’s first business trip to the United States in five years.