Samsung Electronics has unveiled a modest reshuffle that leaves virtually all the key unit chiefs in place, disappointing investors who had banked on the world’s biggest smartphone maker taking more radical steps to address its slumping market share and profits.
Contrary to market expectations, the South Korean company opted not to jettison Shin Jong-kyun, chief executive of its mobile division, or his two co-chief executives – Kwon Oh-hyun and Yoon Boo-keun, who head semiconductors and televisions respectively.
Mr Shin has been under pressure amid a rapid profit decline of the smartphone business as Samsung finds itself sandwiched between its erstwhile rival Apple and lower-cost Chinese competitors such as Xiaomi, Lenovo and Huawei.
Analysts were disappointed but noted that the group’s presumed heir, Lee Jae-yong, may have balked at making major personnel changes while his father and chairman Lee Kun-hee remains in hospital after suffering a heart attack in May.
“They seem to have focused on the organisation’s stability, rather than changes, as chairman Lee’s fate remains uncertain and large-scale shake-up carries more risks,” said Park Kang-ho, analyst at Daishin Securities.
“But it will be hard to reverse the company’s fortunes under the existing leadership, with Samsung likely to continue to lose its smartphone market share, as Chinese rivals expand aggressively in China and other emerging markets.”
Samsung did not explain why Mr Shin was not part of the annual reshuffle. Under Mr Shin’s leadership, the smartphone business had churned out profits until the recent reversal in fortunes when third-quarter operating profit plunged 60 per cent from a year earlier.
Global smartphone market share fell to 24.7 per cent in the third quarter, down from 35 per cent a year earlier, according to Strategy Analytics. Waning popularity for Galaxy smartphones has also weighed on other businesses such as processor chips and OLED displays.
While the reshuffle was modest, the scale of Samsung’s plight was illustrated by the reduced ranks of promoted executives – the lowest number since the 2008 financial crisis, according to Park Ju-geun, head of corporate watchdog CEO Score.
The modest reshuffle, he added, “is disappointing for investors who had expected a new captain for the mobile business. Retaining Mr Shin means that Samsung has failed to find a new strategy to reverse its downward trend.
“The company is basically trying to protect its status quo, rather than going aggressive to change things, which is not a good sign for investors.”
Samsung elevated only three vice-presidents – those in charge of televisions, memory chips and display – to presidents. Kim Hyun-suk, vice-president of visual display, and Jun Young-hyun, vice-president of memory chips, became presidents while Lee Yun-tae, vice-president of the LCD business, became the president of affiliate Samsung Electro-Mechanics.
Chung Sun-seop, head of Chaebul.com, a website that analyses South Korea’s chaebol conglomerates, said the younger Mr Lee seemed reluctant to revamp personnel too aggressively while his father remained chairman.
“But there may be intermittent major changes next year as the group continues its restructuring and Mr Lee tries to strengthen his control of the group,” he added.
Samsung's shares gained 0.2 per cent to Won1.29m in morning trade, outperforming a 0.9 per cent fall in the benchmark Kospi Composite index, as investors took heart from company plans for a share buyback.
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