Samsung shakes up management, commits to reviving chip business

Samsung Electronics, the world's leading smartphone and memory chip maker, announced a management reshuffle on Wednesday, replacing the top brass at its sluggish chipmaking business division.

While retaining the company's three vice chairs for management stability, the company replaced the foundry business chief and created two new positions to enhance operational efficiency.

"The company sought to overcome uncertain internal and external business challenges and aim for a new breakthrough via the personnel shakeup," the company said in Wednesday's announcement.

Vice Chairman Jun Young-hyun, who was appointed as the head of the company's chip division in May, has been entrusted with more roles, being named the chief executive officer and the head of the memory chip business. He has also been appointed head of Samsung Advanced Institute of Technology.

Under Jun's tighter control, the company is expected to make a big push in the burgeoning high bandwidth memory chip area, where it has lost the earlier edge to its smaller rival, SK hynix.

In the third quarter of this year, Samsung's chip division posted 3.86 trillion won ($2.8 billion) in operating profit, only half of what the crosstown rival achieved in the same period, largely buoyed by upbeat demand for its HBM chips.

With Jun's appointment, Samsung will retain its dual-CEO system. Vice Chairman Han Jong-hee continues overseeing the smartphone and appliance business division as CEO.

For its contract chip manufacturing or foundry business grappling with the task of enhancing the yield rate for its most advanced chipmaking processes, the company replaced the chief and established a new chief technology officer position.

Han Jin-man, previously executive vice president and president leading the company's chip business in the US headquarters, has been promoted to president to oversee the foundry business.

For the newly-created CTO position, manufacturing veteran Nam Seok-woo was appointed. Nam, who was president and head of FAB Engineering & Operations, has extensive experience in memory process and foundry technologies, according to the company.

An industry official noted the latest personnel reshuffle placing two C-suite executives highlights the company's intent to ramp up the foundry business as it stands at a crossroads.

"Previously, the foundry business only had one C-suite, but now it has two. The change is similar to making the foundry business a standalone company of a greater scale," the official said under the condition of anonymity.

Although the contract chipmaking unit is the world's second-largest foundry after the giant TSMC, it has been failing to capitalize on the surging demand for AI chip manufacturing, having difficulties in securing big tech firms as clients. The company is expected to face operating losses amounting to several trillion Korean won this year.

Against this backdrop, the appointment of Han, known for his strong networks in the US, is expected to help the client-oriented foundry business and attract new customers.

To boost business management for the overall chip division, the tech giant also created a new president-level role for management strategy and appointed Kim Yong-kwan to the position. Kim was previously executive vice president of the Business Support Task Force.

Under the renewed leadership, the tech giant is expected to pursue structural changes to revamp the chip business. Samsung Chairman Lee Jae-yong this week pledged to do everything he could for the company to overcome the hardships it faces. The chip leader Jun also issued a rare apology in October, promising to restore "fundamental competitiveness" in technology.

In the follow-up reshuffle expected in the coming days, the company is also anticipated to replace some 100 of 400 executives in the chip business.