New generation of leaders named to ease investor concern

SEOUL • Samsung Electronics named a new generation of top managers and promised to reward shareholders with US$26 billion (S$35.3 billion) in payouts from next year till 2020, as it reported record third-quarter profit.

The world's biggest maker of semiconductors, televisions and smartphones replaced the leaders of its three main businesses, named chief financial officer Lee Sang Hoon as the likely new board chairman, and said veteran co-chief executives J.K. Shin and Yoon Boo Keun would resign.

The shake-up is designed to ease investors' concerns about a leadership vacuum following the arrest and conviction of group scion Jay Y. Lee on bribery charges.

"It's a younger generation of leaders, but the divisional structure has not fundamentally changed," said Mr Park Ju Gun, head of research firm CEO Score.

The new appointees are all long-serving Samsung insiders whose elevations suggest continuity.

Mr Kim Ki Nam, 59, was appointed to lead the device solutions division which makes components including memory chips, the major driver of the firm's record third-quarter profit.

Mr Park Jung Hoon, fund manager at HDC Asset Management which holds Samsung shares, said there were "some concerns" Mr Kim would expand chip capacity and upset the currently favourable supply-demand balance.

"However, today's (post-earnings call with analysts) said the chips business will focus on profitability, not market share - suggesting they will continue the current course without deviation, which puts our minds to rest," he told Reuters.

In other appointments, Mr Koh Dong Jin, 56, would head IT and mobile communications, and Mr Kim Hyun Suk, 56, would lead consumer electronics. The changes were effective immediately.

Samsung said capital expenditure for this year would be its biggest, climbing 81 per cent to 46.2 trillion won (S$56.2 billion) as it builds new chip factories and clean-rooms to stay ahead of demand for servers and devices with ever greater memory.

REUTERS

A version of this article appeared in the print edition of The Straits Times on November 01, 2017, with the headline 'New generation of leaders named to ease investor concern'. Print Edition | Subscribe