Is a succession plan in the making at the top of Asustek Computer Inc (華碩)?
Chairman Jonney Shih (施崇棠) has held that position for more than 20 years, showing no signs of relinquishing it, and the PC company has never said it has a succession plan in place.
However, an announcement from Asustek on Wednesday caught the market off guard, with the company saying it is inviting one of its founders, Ted Hsu (徐世昌), to serve as chief strategy officer — a new position in the decisionmaking inner circle.
Hsu, an old acquaintance of Shih’s, joined Pegatron Corp (和碩) in 2008 after Asustek span off its computer-related contract manufacturing unit.
He moves back to Asustek next month from his current post of vice chairman at Pegatron.
At Asustek, Hsu is to share corporate strategy and major decisionmaking with Shih, vice chairman Jonathan Tsang (曾鎗聲) and chief executive officer Jerry Shen (沈振來), the company said.
Hsu is expected to be nominated to sit on the company’s board in July at the earliest, according to Asustek.
The unexpected appointment has sparked questions: Is Shih planning to retire soon, and why did he not tap high-ranking Asustek executives — such as Shen — for the post, instead of a person who left the firm eight years ago?
“Shen is qualified as a CEO and chairman at the same time, but it is too physically challenging for him and might not be the best option for the company,” said a Yuanta Securities Investment Consulting Co (元大投顧) analyst, who declined to be named.
Other industry watchers said 64-year-old Shih is intending to spend more time with his family and has decided on a succession plan after his right-hand man and former chief financial officer David Chang (張偉明) passed away in July last year.
If Shih promoted Shen to chairman, a scramble to fill Shen’s position might trigger a power struggle among the firm’s top executives, and that would be bad for the company, industry watchers said.
Therefore, Hsu’s seniority at Asustek might be enough to maintain the delicate balance of power among ranking executives, while his close personal relationship with Shih also makes him a promising candidate, they said.
During his time in Asustek, Hsu won praise for being an important research and development leader with a strong engineering background. He participated in some major decisionmaking and, in the early 2000s, he suggested Asustek — a supplier of high-end motherboards at the time — set up ASRock Inc (華擎), a subsidiary to specifically target mid and low-end motherboard markets.
It was a decision that proved to be visionary, as it helped Asustek to expand its motherboard market share in the global market and widened the distance between Asustek and its competitors in the industry, according to people familiar with the matter.
Shih once described Hsu as a natural manager with keen observation and extraordinary foresight for industry trends.
“I think he is like Zhuge Liang (諸葛亮) [a military strategist during China’s Three Kingdom’s era],” the Chinese-language Business Today (今周刊) quoted Shih as saying in an interview in April last year.
However, Hsu still seems to be a surprising choice for chairman, given his unfamiliarity with Asustek’s operations over the past eight years.
“To be honest, I am a bit terrified, as I am not familiar with Asustek’s operations after years of not being around the company,” Hsu said on Thursday after being asked by reporters how he felt about returning.
In addition, the company is under mounting pressure to reevaluate its non-PC strategy amid declining PC demand and a fiercely competitive smartphone market, but perhaps more importantly, the company needs to show its ability to innovate and transform and stop relying on PC’s, said Thompson Wu (武光明), an analyst at Credit Suisse Group AG’s Taiwan equity research division.
“We believe Asus needs to execute a significant strategic transformation,” Wu wrote in a note on Friday. “The new chief strategy officer, Ted Hsu, comes at a critical time in Asus’ transformation.”
Besides its recent emphasis in gaming PCs, Asustek has expressed interest in robotics and is planning to unveil its first consumer service robot during the Computex trade show in Taipei, which opens at the end of next month.
Wu said further investment in industrial PCs and the use of the Internet of Things technologies in industry are options for Asustek going forward.
Whether the company wants to admit to Shih’s succession plan or not, challenges await, and if Hsu will be truly embraced by other Asustek executives and employees remains to be seen.
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