Samsung names new CEOs, to merge mobile, consumer electronics units
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On April 28th, 2021, a Samsung flag (R), and a South Korean flag flew at Seoul’s Seocho office.
JUNG YEON JE via AFP via Getty Images| AFP via Getty Images
Samsung ElectronicsIt will merge its mobile electronics and consumer electronics sections, according to the company Tuesday. The new co-chief executives are part of the largest restructuring since 2017, which aims to reduce its complexity and put more focus on its logic chips business.
The South Korean company will have two co-chief executives instead of the usual three as it pivots to the two business pillars chips and consumer electronics, which include smartphones. This is in order to lead the next stage of growth and increase competitiveness.
Samsung’s Galaxy brand, which helped make it the largest smartphone manufacturer in volume worldwide, wants to revive mobile growth. Its profit share has fallen to just 21% from almost 70% during its peak period of early 2010, when it was at nearly 70%.
The company’s components business is now the most profitable. This has been due to an increase in data storage and a shortage of semiconductor supplies.
Nearly three quarters of Samsung’s $13.4 billion ($15 trillion) operating profit was generated by the business.
Samsung announced that Han Jong-hee (head of the visual display business) will be co-CEO. He will lead the new merged division that includes mobile and consumer electronics, as well as continue to run the TV business.
Han rose through the ranks of Samsung’s visual displays business without any experience in mobile.
Although it is unclear what divisions or changes are expected to take place under Han, analysts believe that the reshuffle will help Samsung address challenges like offering seamless connected services between smartphones and their home appliances.
Lee Jaeyun from Yuanta Securities Korea, an analyst, said that the most difficult task in the long-term is forming a Samsung Platform.
It is essential that these businesses keep improving connectivity among devices. But, so far it has not been possible to build a sustainable platform.
The immediate issues include a lack of chips supplies, increasing raw material prices and logistics problems. Apple and Chinese rivals amid concerns about a slowing mobile market, analysts said.
Prompt decision making
Kyung Kye-hyun, chief executive of component affiliate Samsung Electro-Mechanics and a former head of the flash memory chip and technology team, was named co-CEO to lead the chip and components division.
Chung Hyunho was also promoted to vice chairman. He is the head of “task force”, which analysts say coordinates Samsung Electronics’ decision-making and that media report closely links with Lee.
The re-organization is the latest sign of centralized change at Samsung after Vice Chairman Jay Y. Lee was paroled in August after a bribery conviction.
Kim Sun-woo from Meritz Securities said that “there may be more prompt execution funds or decision making.”
Samsung Electronics has not named any new division head since late 2017.
This group will focus on the areas of semiconductors, artificial Intelligence, robotics and biopharmaceuticals. Plans are to invest 240 trillion won (or $206 billion) over three years.
Group flagship Samsung Electronics aims to overtake TSMC to become No. With an investment of approximately $150 billion, the logic chip business will become No.1 in chip contract manufacturing in 2030.
Samsung, after much deliberation and months, chose Taylor, Texas in the U.S. for the $17-billion planned chip plant. It was Lee’s first trip abroad in five years.
Samsung Electronics’ shares rose 1.6%, surpassing a 0.4% increase in benchmark index.
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