Tokyo At South Korea’s electronics giant Samsung Electronics, a large personnel carousel traditionally takes place in December. But this time the de facto company boss Lee Jae-yong surprised Korea AG with one of the biggest management changes in the company’s history: As part of a company reform, Samsung is replacing the bosses of the three largest divisions in order to position the company according to its own information “for the growth phase” and strengthen competitiveness.
TV expert Han Jong-hee is promoted from the second row to deputy group chairman and CEO of the newly created SET division. He will be responsible for the previously separately managed flagship entertainment electronics and IT / mobile communication, which were previously headed by Co-CEOs Kim Hyun-suk and Koh Dong-jin.
The Device Solutions (DS) division, i.e. the chip division, will in future be headed by semiconductor expert Kyung Kye-hyun, who was previously CEO of Samsung Electro-Mechanics. The previous incumbent Kim Ki-nam, who was after all deputy group chairman, was appointed chairman of the Samsung Advanced Institute of Technology.
The major change in personnel cannot be due to collective management failure. Driven by its strong memory chip division, Samsung posted record sales and high profits in the previous quarter. The markets had therefore expected that the previous bosses would continue to run the group. In addition, the recently released grandson of the company founder Lee still has to defend himself against several charges in court.
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But it is precisely this legal pressure that drives Lee to a major corporate reform that pursues two goals: On the one hand, he wants to strengthen Samsung in global competition and develop the group from a memory chip specialist into one of the leading contract manufacturers of chips. On the other hand, he wants to portray himself and Samsung as purified after his conviction for corruption.
The last dynastic heir to Samsung
He recently stated that he wanted to create “a better Samsung” through a major reform. Lee has already promised that he will be the last dynastic heir to Samsung. In addition, he wants to improve corporate management, which has hitherto been criticized as opaque, and flatten the hierarchies that have so far been built on command and obedience.
Just last week, the group presented a revised personnel system that is intended to facilitate the advancement of young managers and make the corporate culture more flexible. In addition, seniority was devalued as an important criterion for promotion.
Samsung combines this with the hope of becoming more attractive in the battle for talent and faster in global competition. Because the good results cannot hide the fact that Samsung’s former flagships such as televisions and smartphones, which established Samsung’s rise to a global brand, have lost their shine.
Instead, the Koreans owe the high profits to the long-standing boom in memory chips, in which Samsung is the world market leader. For years, the group has therefore been trying to develop new growth areas beyond the three key divisions, with little success.
Against this background, the amalgamation of the entertainment electronics and mobile divisions demonstrates how much Samsung sees itself on the defensive in these areas in competition, especially with Chinese rivals. The group expects the new boss Han to “strengthen the synergies between the various business areas in the SET division” and to promote the development of “new businesses and technologies”.
Expansion of the semiconductor division
Most of the investments, however, will go into expanding the semiconductor division. Because Samsung and the Korean government want to build the group into the largest contract manufacturer of computer chips in competition with the US rival Intel and the world market leader TSMC from Taiwan.
It was only in November that the Koreans announced that they would build a plant in the USA for 17 billion dollars. With his expertise in chip development, the new division head Kyung will now defend Samsung’s leadership position in traditional fields and at the same time “drive innovations in the components business,” the group announced.
However, Samsung piously left a management position vacant: Although long-time CEO Lee Kun-hee died in October 2020, Samsung continued to leave the position of Chairman of the Board of Directors vacant. His son Lee Jae-yong will initially lead the group as vice chairman.
More: There is no end in sight to the boom in the chip industry – the delivery bottlenecks remain.