Samsung posted a record third-quarter profit — now, it's searching for a new CEO
Samsung Electronics on Tuesday announced record profits for the third quarter, benefiting from strong demand for memory chips used in mobile devices and servers.
While the earnings were in line with guidance the South Korean technology giant provided earlier this month, the focus at its Tuesday board meeting will likely be on finding a replacement for CEO and Vice Chairman Oh-Hyun Kwon.
The company said earlier this month that Kwon decided to step down from management and will not seek re-election onto the Samsung board once his current term ends in March, 2018.
Following the imprisonment of Jay Y. Lee, the heir to Samsung Group, on charges of bribery and embezzlement, Kwon had been the company's de-facto chief. In August, a South Korean court sentenced Lee to a five-year jail term, but he is currently appealing the decision.
Since Kwon's announcement earlier this month, there have been some concerns it could lead to a potential leadership vacuum at the tech giant.
"Leadership vacuum concerns already existed since last year," Daniel Yoo, head of the global strategy team at Kiwoom Securities told CNBC, adding the important question to focus on is "who will be the next CEO of Samsung."
In a letter to employees, Kwon said the time was right for Samsung to "start anew, with a new spirit and young leadership" to better respond to challenges from the rapidly changing technology landscape.
"It is still uncertain whether the appointment of a new president will be small or large," Yoo said. He added that some believed that, given Samsung's current situation, a "less radical change will be more suitable."
According to local media and analysts, there are several contenders for Kwon's role, including Kim Ki-nam.
Kim is the president of the semiconductor business at Samsung and is a seasoned veteran at the company, having joined in 1981. He led developments of various memory technologies and is said to be Kwon's "right-hand man" in Samsung's hierarchy.
"If Kim Ki-nam becomes the president then some worry about aggressive production increase of DRAM," Yoo said, referring to one of the types of memory chips Samsung produces.
An aggressive ramp up in production for those chips would help the South Korean behemoth gain market share, but it would likely depress the high prices Samsung now gets for its products. That's why there's some consternation about what increased chipmaking could mean.
Kim, Yoo predicted, is unlikely to implement an aggressive production increase "due to competition that might rise from China and Taiwan."
Yoo added that semiconductor producers like Samsung are set to enjoy higher prices at least until the fourth quarter of 2018 due to growing demand — not just from PC makers and mobile devices, but also from other technologies like artificial intelligence.
Another potential contender for the CEO role is Jin Gyo-young, the executive vice president and general manager of the memory business. Jin joined Samsung in 1997 and is credited on the company's website as being responsible for "bringing key next-generation memory technologies to market."
Also in the running, according to various reports, are:
- Lee Sang-hoon, president and chief financial officer, corporate management office
- Jun Dong-soo, head of the medical equipment business, CEO of Samsung Medison
- Jun Young-hyun, CEO of Samsung SDI
- Yoon Boo-keun, president and head of the consumer electronics business
- Shin Jong-kyun, president and head of the IT and mobile communications business
According to Yonhap, rumors suggest that Samsung's vice president level executives may be swiftly promoted as well.
"Samsung has very many seasoned veterans who will get promoted as a result of the executive shuffling," Patrick Moorhead, president and principal analyst at Moor Insights and Strategy, told CNBC.
"I do think Samsung needs to make sure that at least one of the replacements has a long-term vision for the company," he added.
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