Samsung Group’s first management restructure since family patriarch Lee Kun-hee’s heart attack is set to focus on the executives leading the world’s biggest smartphone business as earnings slump and market share shrinks.
The annual changes, which South Korea’s biggest business conglomerate will announce next month, are the first with heir apparent Lee Jae-yong overseeing the revamp since his father was hospitalized in May.
The moves are the latest twist at the Samsung empire that spans from appliances and insurance to military weapons as the controlling Lee family tries to revive growth and hand over power to a new generation. Slumping earnings at Samsung Electronics Co because of challenges from Apple Inc and Xiaomi Corp are putting the spotlight on the mobile unit headed by Shin Jong-kyun.
“A large-scale leadership change at the mobile division may come,” said Chung Chang-won, an analyst at Nomura Holdings Inc in Seoul. “Samsung is a very performance-oriented company, so the top leadership who misstepped in the mobile business will have to pay the price.”
Shares of Samsung Electronics fell 0.3 percent to 1,220,000 won at the close of trade in Seoul. The stock has fallen 11 percent this year and is headed for its second straight annual decline after a 9.9 percent drop last year.
Samsung Group has typically used its year-end management shakeup to set goals for the next year. Last year, it announced 16 top-level appointments on Dec. 2 before detailing another 475 executive promotions three days later, citing its principle of “compensation aligns with the performance.”
Samsung Group declined to comment yesterday on the details of its annual review of managers.
While the amount of job changes this year may not match the size of last year’s revamp, the mobile business will attract the most attention, Leading Investment & Securities Co analyst Oh Sang-woo said.
“Samsung needs to freshen itself up now, so any major top- level shuffle will revive the tension and change the complacent culture,” Oh said. “Samsung was slow addressing the new market trend, which allowed smaller players like Xiaomi to kick in. It now needs strong leadership who can take decisive, but timely, action.”
Even before the management announcement, Samsung is taking steps to find new growth. It plans to cut the number of smartphone models it produces by as many as a third next year and focus on products where it has a competitive edge.
Samsung transferred about 500 workers from the mobile unit, the largest contributor to earnings since 2011, to other divisions as it seeks growth in connected devices, people familiar with the matter have said. In May, the company replaced the leader of its mobile-device design team.
Still, with the company last month posting its smallest quarterly profit since at least 2011, the focus is on the division led by Shin, a co-CEO who has led the mobile phone unit since 2009, including its ascent to become the world’s biggest smartphone maker.
Shin may be moved out of his role as head of mobiles, the Wall Street Journal reported, citing unidentified people familiar with the matter. Co-CEO Yoon Boo-keun may add the mobiles division to his role leading home appliances and TVs, the Journal said.
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