As Samsung Electronics recorded performance that fell below market expectations in the third quarter of this year, bold innovation and change are needed. In particular, it is expected that there will be major changes in personnel and organizational reorganization of the CEO in the Device Solutions (DS) division, which is in charge of the semiconductor business, which has shown historically poor performance. According to plan, Samsung Electronics should have carried out personnel and organizational reorganization of the CEO team early this month, but it has been reported that it has been postponed one by one due to difficulties in selecting the CEO of the DS division.
According to the business world on the 18th, Samsung Electronics usually announces year-end personnel changes in early December, but last year, the reorganization was carried out in mid-November. It is expected that the reorganization will be announced at a similar time this year as last year.
Samsung Electronics Seocho Headquarters. /Photo = Yonhap News
The keyword for Samsung Electronics’ reorganization this year is likely to be ‘renovation’ rather than ‘stability’.
Samsung Electronics’ consolidated operating profit in the third quarter was KRW 9.1834 trillion, an increase of 277.37% compared to the same period last year. Among these, the operating profit of the DS division remained at 3.86 trillion won, more than 3 trillion won behind the operating profit of competitor SK Hynix.
The problem was the delay in supply of high-bandwidth memory (HBM), the core of artificial intelligence (AI) semiconductors. In addition, one-time costs such as a reduction in the size of inventory valuation loss reversal and incentive provision, and the welcome change due to the weakening dollar also played a role.
In the case of Samsung Electronics, as the sense of crisis is increasing in all directions in its flagship semiconductor business, the heads of the DS division, including the head of the memory business division (president), the head of the foundry business division (president), the head of the system LSI division (president), and the head of global manufacturing/infrastructure, are appointed. There is speculation that there will be a wholesale replacement.
Samsung Electronics has not been able to achieve any significant results even after replacing the head of the DS division with Vice Chairman Jeon Young-hyun in May. As the semiconductor crisis is expected to continue next year, it is expected that this year, the company will focus on finding ways to overcome the crisis and prepare for the future by reorganizing the DS division.
However, some are pointing out that Samsung Electronics may be having difficulty selecting the CEO of the DS division.
Initially, Samsung Electronics was expected to change the CEO of its DS division early this month, but it turned out to be a misinformation and ended as an incident. Afterwards, several appointments were mentioned, but they did not materialize.
An industry official said, “In a situation where Samsung Electronics is short on talent with extensive semiconductor work experience, unreasonable personnel appointments in the CEO team may cause more harm than good,” adding, “Samsung Electronics will need to be more careful than ever in personnel appointments in the CEO team.”
The signature left by Nvidia CEO Jensen Huang on the Samsung HBM3E. /Photo = Yonhap News
Stock prices also hit rock bottom due to the semiconductor crisis.
Samsung Electronics’ semiconductor crisis was fully reflected in its stock price.
Samsung Electronics’ stock price closed at 49,900 won on the 14th, down 1.38% from the previous trading day.
It has been 4 years and 5 months since Samsung Electronics’ stock price fell below 50,000 won on June 15, 2020 (49,900 won).
As the stock price fell below the 50,000 won level, there were concerns about damage to minority shareholders, estimated at approximately 4.25 million.
Afterwards, thanks to the low-price buying trend on the 15th, it succeeded in a rebound in 6 trading days and recovered to the 50,000 won range.
Sensing a crisis, Samsung Electronics began purchasing its own shares worth a total of 10 trillion won to improve shareholder value, and the current stock price is maintained at 50,000 units.
An official from the securities industry pointed out, “Samsung Electronics’ recent share purchase and cancellation is expected to have a positive impact on the stock price,” adding, “However, for the effect to last, performance improvement must be supported.”
Reporter Shin Jong-mo [email protected]
What specific strategies do you think Samsung Electronics should implement to improve the performance of its DS division and address the current semiconductor crisis?
1. As we can see in the article, Samsung Electronics is facing a big challenge in its semiconductor business, especially with the poor performance of the DS division. What are your views on the reasons for this slump, and what should be the priority for the company to overcome this crisis?
2. There is a possibility of major personnel changes in the DS division amidst this crisis. In your opinion, what qualities should Samsung Electronics look for in a new CEO to lead the division towards success?
3. The stock price of Samsung Electronics has also been affected by the semiconductor crisis, shaking the confidence of minority shareholders. How can the company reassure its shareholders and regain their trust in these challenging times?
4. Renovation seems to be the keyword for Samsung Electronics’ reorganization this year. What kind of changes do you expect to see in the company’s organizational structure, and how would these changes contribute to long-term growth?
5. with the semiconductor industry becoming increasingly competitive, what role do you see Samsung Electronics playing in the global landscape, and what should be its strategy to maintain its position as a market leader?
