Maintaining Three-Person Leadership System, Preparing for COVID-19 and Judicial Risks Until Next Year
Youthful and High-Performing Executives Fully Assigned to Core Business Units
[Asia Economy reporters Changhwan Lee and Gimin Lee] Samsung Electronics' 2021 regular executive promotions announced on the 2nd are evaluated as reflecting Vice Chairman Lee Jae-yong's careful consideration in choosing 'renewal amid stability.'
Given the very high likelihood that unprecedented management crises such as the novel coronavirus disease (COVID-19) and judicial risks will continue until next year, the company decided to maintain the current three-CEO system while promoting young and talented executives who have delivered outstanding performance, demonstrating a commitment to continue discovering new growth engines without disruption.
◆Promotion of President Lee Jae-seung, the mastermind behind Wind-Free Air Conditioner and Bespoke
This executive promotion was based on meritocracy. Vice President Lee Jae-seung of the Consumer Electronics (CE) division, the first president promoted from the home appliance sector at Samsung Electronics, made remarkable progress based on his achievements.
President Lee led the development of Samsung's new-concept premium home appliances such as the Wind-Free Air Conditioner and the Bespoke series while serving as head of the Refrigerator Development Group and leader of the Home Appliance Development Team. The Wind-Free Air Conditioner, launched in 2016, introduced the concept of 'cooling without wind' for the first time and gained phenomenal popularity.
It attracted great interest from people who dislike cold air directly hitting their skin and now accounts for the majority of Samsung Electronics' air conditioner sales. The Bespoke appliances, characterized by customizable designs tailored to customer preferences, have also recently become a trend.
The Bespoke refrigerator accounted for 65% of total refrigerator sales in South Korea from June last year to the end of October this year, changing the paradigm of the home appliance market. Thanks to the premium home appliance boom, Samsung Electronics' CE division recorded an operating profit of 1.56 trillion KRW in the third quarter, a 200% improvement compared to 520 billion KRW in the same period last year. This is the highest quarterly performance ever. Analysts say remarkable results have been achieved since President Lee took office as head of the Home Appliance Business Division in January.
A Samsung Electronics official said, "President Lee is the first president promoted from the home appliance sector since Samsung Electronics' founding and is regarded as a living witness who has shaped the history of home appliances today," adding, "Through this promotion, he is expected to lead the home appliance business to global number one."
In the Device Solutions (DS) division responsible for semiconductors, Vice Presidents Lee Jung-bae and Choi Si-young were promoted to president based on outstanding performance. President Lee Jung-bae, who led Samsung Electronics' DRAM to world number one as head of DRAM development, will oversee all memory semiconductors including NAND flash and solutions as head of the Memory Business Division.
President Choi Si-young, head of the DS division's Foundry Business Division, who has led process development and manufacturing for all semiconductor products, is expected to lay the foundation for Samsung Electronics to achieve world number one in foundry. The foundry business is rapidly growing in market size and is considered a new growth engine for Samsung Electronics' semiconductor business.
◆Three-CEO system of Kim Ki-nam, Kim Hyun-suk, and Koh Dong-jin maintained
Samsung Electronics maintained the existing three-CEO system with Vice Chairman Kim Ki-nam of the Device Solutions (DS) division, President Kim Hyun-suk of the Consumer Electronics (CE) division, and President Koh Dong-jin of the IT & Mobile (IM) division. The retention of the three CEOs is attributed to their excellent performance this year despite the COVID-19 management crisis, which is seen as successfully overcoming the challenges.
Samsung Electronics' operating profit for the third quarter this year was 12.3 trillion KRW, significantly exceeding market expectations. This was thanks to steady semiconductor performance throughout the year and strong sales in the set divisions such as smartphones and home appliances. It was also the first time in seven quarters since Q4 2018 that Samsung Electronics' quarterly operating profit exceeded 10 trillion KRW. Earlier in the year, Samsung Electronics recorded earnings surprises exceeding expectations, indicating a significant improvement in this year's performance compared to last year.
Accordingly, Vice Chairman Lee is interpreted as planning to maintain the three-CEO system to overcome the COVID-19 management crisis expected to continue into next year.
The ongoing judicial risks facing Vice Chairman Lee and Samsung are also cited as reasons for not making major changes to the executive lineup. Samsung faces several judicial risks, including the retrial of the state affairs manipulation case and allegations of illegal succession of management rights. The retrial of the state affairs manipulation case has recently seen concentrated hearings, with Vice Chairman Lee continuously attending court.
The trial regarding allegations of illegal succession of management rights is also scheduled for January next year. As the prolonged trials place a burden on Vice Chairman Lee's company management, it is expected that the current CEO system will remain largely unchanged to prepare for judicial risks continuing into next year.
◆Affiliate personnel moves, Kim Jae-yeol's talent acquisition role draws attention
Among the affiliate executive promotions, President Kim Jae-yeol of the Samsung Economic Research Institute stands out. President Kim is the husband of Lee Seo-hyun, director of the Samsung Welfare Foundation and the second daughter of the late Samsung Chairman Lee Kun-hee.
On the same day, the Samsung Economic Research Institute announced the appointment of Kim Jae-yeol, head of sports marketing research, as head of the Global Strategy Office. The Global Strategy Office has actively recruited outstanding foreigners to Samsung. President Kim is said to possess excellent global capabilities and has a high understanding of management and business through his experience at Cheil Worldwide, Cheil Industries, Samsung Engineering, and other companies, leading to his appointment to lead the Global Strategy Office.
Samsung SDS announced the appointment of Hwang Sung-woo, president of Samsung Electronics, as its new CEO. President Hwang holds a Ph.D. in Electrical Engineering from Princeton University and has served as a professor in the Department of Electrical and Computer Engineering at Korea University. Based on his experience leading various development projects including software at Samsung Electronics' Advanced Institute of Technology, his global capabilities, and extensive internal and external networks, President Hwang is expected to grow Samsung SDS into a global IT solutions company.
Samsung Display also promoted Vice President Choi Joo-sun to CEO and President, and Vice President Kim Sung-chul to president in its executive promotions. CEO Choi, who will lead Samsung Display going forward, holds a Ph.D. in Electronic Engineering from KAIST and is a semiconductor design expert who has served as head of DRAM development at Samsung Electronics' Memory Business Division, head of the Strategy Marketing Team, and head of the DS division's Americas operations. Since January this year, he has been leading the development of quantum dot displays as head of Samsung Display's Large Display Business Division.
A Samsung Display official emphasized, "With this promotion, President Choi is expected to lead the display business to world-class status and a new leap forward based on his semiconductor success know-how and experience."
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