Samsung Electronics CEO quits in shock move

The resignation of Mr Kwon Oh Hyun, Samsung Electronics' CEO and vice-chairman, deepens concerns over a leadership vacuum at the tech giant. PHOTO: REUTERS

SEOUL • Samsung Electronics said yesterday that its chief executive officer and vice-chairman Kwon Oh Hyun plans to step down from management, deepening concerns over a leadership vacuum at the technology giant after group scion Lee Jae Yong was jailed for bribery.

The surprise resignation 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 Mr Kwon was instrumental in building into the world leader.

"The timing is nonsensical. Samsung tipped record earnings, it is going to be better in the fourth quarter, and all that has been driven by Mr Kwon's components business," said Mr Park Ju Gun, head of research firm CEO Score.

Mr Kwon, 64, is seen as Samsung Group's 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."

The world's biggest maker of memory chips, smartphones and TVs is set to smash its annual profit record this year, thanks partly to soaring demand for memory chips. Semiconductors were Samsung's top earner in the three months through June, bringing in a record eight trillion won (S$9.6 billion).

The global chip industry is undergoing a major shift with Japan's Toshiba partnering home rival SK Hynix, and other companies consolidating in search of new growth areas such as artificial intelligence and vehicles.

The departure of 32-year Samsung veteran Kwon after five years in the top job comes at a time of leadership uncertainty at the firm.

Mr Choi Gee Sung, 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 Mr Kwon's exit.

Mr Kwon would serve out his term as chairman of the board and board director until March next year, the company said. He is also not stepping down immediately from his two other roles.

A Samsung Electronics spokes-man declined comment on the exact timing of succession and potential successors for his roles.

While Samsung Group is South Korea's top conglomerate, with businesses ranging from smartphones to hotels - it has had no "Plan B" for taking big decisions following Lee's arrest, people familiar with the matter have said.

"I am worried about a leadership vacuum at a time when Lee is absent from management," said Mr Chung Sun Sup, chief executive of research firm Chaebul.com, following Mr Kwon's announcement.

The leadership changes also could be an opportunity for a new generation to emerge, he added.

REUTERS

A version of this article appeared in the print edition of The Straits Times on October 14, 2017, with the headline 'Samsung Electronics CEO quits in shock move'. Print Edition | Subscribe