Samsung Electronics Chief Resigns, Citing ‘Unprecedented Crisis’

Samsung Electronics said on Friday chief executive Kwon Oh-hyun, a key figure in building the company’s memory chip business, would leave management amidst wider leadership upheavals at Samsung.

The surprise move came the same day that Samsung forecast record quarterly profits – due in part to the industry-leading memory chip business in whose growth Kwon has been instrumental.

Shock resignation

Kwon cited an “unprecedented crisis” at the company in his decision, saying he could “no longer put it off”.

“As we are confronted with unprecedented crisis inside out, I believe that time has now come for the company (to) start anew, with a new spirit and young leadership to better respond to challenges arising from the rapidly changing IT industry,” he said in a statement.

Kwon, 64, is one of three Samsung co-chief executives and is widely seen as the company’s second-in-command after heir apparent Lee Jae-yong, who was convicted of bribery and corruption charges in August.

With Lee’s imprisonment on a five-year sentence Kwon had been expected to play a larger role at Samsung. Other key executives have also left the company amidst the bribery scandal.

Kwon, known as ‘Mr. Chip’, is chairman of Samsung’s board and a board director, as well as heading the components business, which includes memory chips, and the display business. He is a 32-year Samsung veteran and has held the chief executive role for five years.

Chip growth

Industry analysts said the timing of Kwon’s announcement appeared paradoxical, but Kwon insisted it was the right time for a change.

“We are fortunately making record earnings right now, but this is the fruit of past decisions and investments,” he stated. “We are not able to even get close to finding new growth engines by reading future trends right now.”

Samsung is set to report record full-year earnings in part due to surging demand for memory chips, according to analysts.

Samsung is the world’s largest smartphone maker, and said the Galaxy Note 8 smartphone also contributed to higher earnings, receiving the firm’s highest number of pre-orders to date.

Samsung said it expects operating profit in the three months to the end of September to have tripled from the same period a year earlier.

It forecast profit of 14.5tn won (£9.65bn) for the quarter, beating market expectations.

Succession plans

Kwon is to serve out his term as chairman of the board and board director until March 2018, the firm said. He is also to continue to direct the components and display units for the time being.

Samsung said in a statement a successor to Kwon would be appointed “soon”.

Samsung Electronics is considered the leading firm in the Samsung Group conglomerate of dozens of linked companies ranging from smartphones to hotels. It is the leading chaebol – or family-run business – in South Korea.

In August Lee Jae-yong, the only son of Samsung chairman Lee Kun-hee, was convicted on charges of giving donations worth 41bn won to non-profit foundations operated by a friend of South Korea’s former president Park Geun-hye, in return for political favours.

He is appealing the sentence.

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