Samsung Electronics earlier today announced that its vice chairman and chief executive officer, Oh-Hyun Kwon, had decided to step down from the management. The resignation comes as a surprise following the arrest of Jay Y. Lee earlier this year on bribery charges, as well as the departure of other big executives from the company. He will step down from the role of CEO in March 2018.
“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 in the rapidly changing IT industry,” Kwon Oh-hyun, 65, said in a letter to employees.
Apart from that, the company in a statement also said that Kwon’s plans to resign as head of Samsung’s semiconductor and component business will not look for re-election on the company’s board. The news came on the same day when the smartphone maker forecasts record third-quarter operating profit on the back of the memory chip business. Kwon is one of the two vice-chairmen at Samsung Electronics with Jay Y. Lee, who was sentenced to five years in prison for bribing.
In a letter circulated to company employees, he said, ”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”.
Chung Sun-sup, the chief executive of research firm Chaebul.com, said he was “surprised and curious about why he is quitting despite record profits”. “I’m also worried about a leadership vacuum at a time when Lee is absent from management,” he further mentioned. ALSO READ: Xiaomi narrows gap with Samsung as India’s smartphone market grows at 12% in Q1 2017: Canalys
Kwon was known for forming a strong base for Samsung Electronics’ position in memory chips and also has a great contribution to expanded the contract chip manufacturing business too. Here, it is worth noting that Samsung’s component business generates much of the firm’s profits when compared to the earnings from the smartphone market.
Last year, Samsung chipset manufacturing business saw sales of $4.44 billion. The report further says that though Samsung has already set its firm base in the chipset market fighting against big companies like Qualcomm Inc, Nvidia Corp and NXP Semiconductors as clients, it might take Samsung a long way to catch up to TSMC, which currently leads the market. ALSO READ: Samsung aims to triple its chip foundry market share in 5 years
At a time when the company is expecting triple year-on-year operating profit, a step like this could have a major impact on the company’s operations. This is believed o be a very strong recovery of Samsung after being massively hit by the 2016- Galaxy Note7 recall fiasco. Earlier this year, Kwon Oh-Hyun delivered an apology for messing up with the Galaxy Note7 manufacturing. Apart from that, Samsung is also expected to announce a new shareholder return policy for the next three years in the end of October when it releases third-quarter results.
Kwon Oh-Hyun joined Samsung in 1985 as a researcher and was later lifted to lead Samsung’s semiconductor business before his appointment as CEO of the Samsung group.