Samsung Elec CEO Kwon An­nounces Shock Res­ig­na­tion as Prof­its Surge

The Economic Times - - Around The World - Joyce Lee & Hyun­joo Jin

Seoul: Samsung Elec­tron­ics Co said on Fri­day its CEO and vice chair­man Kwon Oh-hyun plans to step down from man­age­ment, deep­en­ing con­cerns over a lead­er­ship vac­uum at the tech gi­ant af­ter group scion Jay Y Lee was jailed for bribery. The su r pri se re si g na­tion of Samsung’s chip and dis­play head came as he was ex­pected to take a big­ger role fol­low­ing Lee’s ar­rest in Fe­bru­ary and the de­par­tures of other key ex­ec­u­tives in the wake of the bribery scan­dal. The move came on the same day the South Korean smart­phone maker fore­cast record third-quar­ter op­er­at­ing profit on the back of the mem­ory chip busi­ness which Kwon was in­stru­men­tal in build­ing into the world leader. “The ti ming is non­sen­sica l. Samsung tipped record earn­ings, it’s go­ing to be bet­ter in the fourthquar­ter, and all that’s been driven by Kwon’s com­po­nents busi­ness,” said Park Ju-gun, head of re­search firm CEO Score. Kwon, 64, is seen as Samsung Group No. 2. As well as be­ing chair­man of the board and a board di­rec­tor, he heads the com­po­nents busi­ness – in­clud­ing mem­ory chips – and the dis­play busi­ness. In a state­ment, the man known as “Mr Chip” said the time had come to “start anew with new spirit and young lead­er­ship”. “We are for­tu­nately mak­ing record earn­ings right now, but this is the fruit of past de­ci­sions and in­vest­ments; we are not able to even get close to find­ing new growth en­gines by read­ing fu­ture trends right now,” he added. The world’s big­gest maker of mem­ory chips, smart­phones and TVs is set to smash its an­nual profit record this year, thanks par t ly to soa ri ng de­mand for mem­ory chips. Semi­con­duc­tors were Samsung’s top earner in the three months through June, mak­ing a record 8 tril­lion won ($7.20 bil­lion). Shares in Samsung, worth about $ 310 bil­lion, fell 1.5% on Fri­day af­ter hit­ting an all-time high ear­lier in the day.

CHANG­ING THE OLD GUARD

The de­par­ture of 32-year Samsung vet­eran Kwon af­ter five years in the top job comes at a time of lead­er­ship un­cer­tainty at the com­pany. Choi Gee-sung, Jay Lee’s men­tor, quit ear­lier this year for his al­leged role in the bribery scan­dal, and Samsung Elec­tron­ics now needs to fill sev­eral more key roles with Kwon’s exit. Kwon would serve out his term as chair­man of the board and board di­rec­tor un­til March 2018, the com­pany said. He is also not step­ping down im­me­di­ately from his two other roles. While Samsung Group is South Korea’s top con­glom­er­ate, it has had no ‘Plan B’ for tak­ing big de­ci­sions fol­low­ing Lee’s ar­rest, peo­ple fa­mil­iar with the mat­ter have said. “I’m wor­ried about a lead­er­ship vac­uum at a time when Lee is ab­sent from man­age­ment,” Chung Sun-sup, chief ex­ec­u­tive of re­search firm Chae­bul.com, said fol­low­ing Kwon’s an­nounce­ment.

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