[IFA 2017] 'Leadership vacuum deals serious blow to Samsung'

BERLIN -- Amid mounting uncertainty over the future of Samsung, with its de facto leader Lee Jae-yong in jail, the world’s largest chip and handset maker has recently lost a business opportunity to acquire an artificial intelligence technology company, said one of the top brass of the company late Thursday.

In a rare speech, Yoon Boo-keun, president and CEO of the consumer electronics division of Samsung Electronics, expressed concerns about the unprecedented leadership vacuum within the tech giant, stressing that he feels like he is sailing without a captain.

“While the IT industry is going through tremendous transformations, we are facing significant difficulties in steering the wheel by filling up the absence of the ‘captain of our fleet,’” Yoon told Korean reporters covering a consumer electronics show in the German capital. 

“’Each head of the four business divisions -- device solutions, mobile communications, consumer electronics visual display -- are having a hard time in terms of structural restructuring and mergers and acquisitions,“ he said. 

The comment came amid lingering mixed views over the impact of Lee’s absence in Samsung Electronics as the tech giant has seen its strongest ever first half performance this year.

Lee was arrested in late February over his involvement in a bribery scandal that led to the ouster of the nation‘s former leader.

Lee’s absence deals a serious blow to the tech giant, as the heir holds the ultimate key in making final decisions for crucial matters including M&As and corporate restructuring, Yoon said.

“Some say that the owner’s absence doesn’t mean a lot to global Samsung, but that’s not true. It feels totally different when you actually do the management from watching it from the outside ... Important decision-making is being stopped, including the restructuring of businesses, because it is difficult for a division chief to make decisions on large M&A projects,” he said.

“Either for a company or a family, ownership is the most important,” Yoon said. “What has made today‘s Samsung was the ownership.”

Samsung has also given up on an M&A project regarding the AI business, said Yoon without elaborating.

“It is not right to say that the project fell apart due to the leadership vacuum, but it’s how you interpret it,” Yoon said. “Doing a business is a matter of timing. I’m not allowed to reveal details of the project, but please understand it as that we missed the right timing.”

Yoon is one of four CEOs of Samsung Electronics’ divisions and a boardroom member.

Sharing his encounter with jailed Vice Chairman Lee, Yoon said that the heir was worrying about Samsung’s global status.

“I visited the vice chairman last Wednesday,” Yoon said. “He asked us to keep Samsung’s No.1 position.”

Two days after their encounter, Lee was sentenced to a five-year jail term. The court found him guilty over all five charges including bribery and perjury, that he had known about the close relationship between former President Park Geun-hye and her friend Choi Soon-sil, which constitutes Samsung’s donation to Choi‘s horse-riding daughter as a crime.

Lee appealed the verdict on Monday, with the tech giant contending the absence of the heir has brought “an unprecedented crisis.” Prosecutors filed an appeal the following day, expecting another fierce legal dispute.

Yoon and three other representatives of company divisions -- Koh Dong-jin, president of mobile communications, Kim Hyun-suk, president of visual display, and Suh Byoung-sam, executive vice president of consumer electronics -- attended the IFA, short for Internationale Funkausstellung Berlin, the largest electronics show in Europe held every September.

Ahead of the six-day show that kicked off on Friday, Samsung unveiled three new wearables -- smart watch Gear Sport, sports band Gear Fit2 Pro and Gear IconX -- innovative washing machine QuickDrive and vacuum cleaner POWER Stick.

On the first day of IFA, Samsung exhibited a slew of its latest home appliances, including IoT-based smart refrigerator Family Hub, new art platform TV Frame and its newest wearables, which suggest a blue print for the smart home of the future at the largest booth named “Samsung Town” at the Messe Berlin venue.

At the booth, the company also made space for industry officials and consumers to experience the latest Galaxy Note 8 smartphone that was unveiled last Wednesday in New York.

However, an explosion of Samsung’s Galaxy S7 smartphone, was reported in Korea on Thursday, following similar reports in other countries including Japan, Australia and the US recently.

CEO Koh Dong-jin, chief of the mobile communications division, said at the press conference that he is being briefed on individual complaints and paying keen attention to it.

“We trust our consumers, but I can confidently tell some other external factors may have caused such an explosion,” Koh said. “The ongoing investigation by an independent institution will take a long time to find out the real cause, but I think it is the right way to deal with it.”

Around 1,800 companies from about 50 countries, including LG Electronics and 39 smaller tech firms from Korea, attended the tech show being held for the next six days.

“Samsung owns a broad range of technology that can connect all kinds of home appliances and mobile devices, and we are ready to boast the connectivity as our strength,” Yoon said.

On the newly emerging AI business, Yoon said the company will continue partnering with Google and Amazon, while trying to develop its own platform.

By Song Su-hyun, Korea Herald correspondent (song@heraldcorp.com)