On December 7, Samsung Electronics announced the biggest high-level personnel change in five years through its official website. The co-CEOs of the three business units will step down. At the same time, Samsung has also merged its consumer electronics and mobile communications business units into setDivision, and focused on the development of logic chip business.
Samsung Electronics' mobile business is mainly mobile phones and the Internet, and consumer electronics business includes televisions, home appliances and medical equipment, and Gao Dongzhen and Jin Xuanshi were previously CEOs respectively. In this personnel adjustment, Han Zhongxi was promoted to vice chairman and CEO of the newly merged SET department of the two departments. Mr. Han, 59, was previously the head of the electronics display business in the consumer electronics business. Samsung Electronics said that Han Zhongxi is a leader in TV research and development, and it is indispensable to the continuous growth of Samsung TV sales around the world. He will strengthen the synergies between the different businesses of the SET division and promote new technologies and business developments.
Another major business unit, the main business of equipment solutions is semiconductors, which was previously served by Jin Jinan, former vice chairman and CEO of Samsung Electronics. In this adjustment, Jin Jinan will be transferred to the chairman of Samsung Electronics Advanced Technology Research Institute, and Qing Guixian will be appointed vice chairman and CEO of the equipment solutions department. Qing Guixian, 58, was the CEO of Samsung Motor, an expert in semiconductor design, a former leader of Samsung Electronics' flash memory product and technology team, and a member of the DRAM design team. Samsung Electronics said It will help maintain the company's leadership in the semiconductor sector and drive innovation in the parts business.
According to the tradition of previous years, Samsung Electronics will make personnel changes at the end of the year, but this personnel change coupled with the adjustment of the overall structure of the company's business is unexpected. This is also another major personnel adjustment after the simultaneous change of CEOs in three business units in 2017. In November, Samsung Electronics launched a reform plan for the personnel system, breaking the previous seniority system and aiming to reuse young talents and realize the rejuvenation of the company's senior management as soon as possible. Samsung Electronics said the new appointment is for the company's next phase of growth and to strengthen the competitiveness of its business. The move is also seen as one of the internal innovations of Lee Jae-yong, Samsung Vice Chairman Lee, who was released from prison on parole in August this year.
Chi Xiannian, senior consultant of CCID Consulting Integrated Circuit Center, said that Samsung's coaching change is brewing a new round of restructuring for Samsung's future development, and strives to inject new vitality into the company by planning innovative strategies for the new leaders in business. An important goal of Samsung's "background construction" is to make Samsung's chips and other basic device products bigger and stronger, and this change of coach will promote the strong development of Samsung's semiconductor business.
At present, Samsung Electronics' equipment solution business has become the main growth point of the company's revenue. Taking the third quarter of this year's financial report as an example, Samsung Electronics' revenue in the third quarter was 73.98 trillion won (about $62.93 billion), and the revenue of the consumer electronics business unit was 14.1 trillion won (about $12 billion). Revenue from the IT & Mobile Communications business unit was KRW 28.42 trillion (approximately USD 24.17 billion). The Equipment Solutions division generated revenue of KRW 35.09 trillion (approximately USD 29.85 billion), of which semiconductor revenue was KRW 26.41 trillion (approximately USD 22.46 billion), up 40% year-on-year and accounting for approximately 36% of total revenue.
As an important development direction of Samsung Electronics, the semiconductor business has recently made frequent major moves. Samsung Electronics announced in May that it would invest a total of 171 trillion won ($145.45 billion) in logic chips and wafer foundries by 2030 to expand its market presence outside of its storage business and hope to leapfrog TSMC to the top spot in the chip manufacturing industry. In August, it said it would invest 240 trillion won ($204.15 billion) over the next three years to expand the company's presence in biopharmaceuticals, artificial intelligence, semiconductors, telecommunications and robotics. In November, it was announced that it would spend about $17 billion to build a new chip factory in Taylor, Texas.
Chi Xiannian pointed out that the purpose of Samsung's move is to reduce its heavy dependence on the memory chip business and better withstand the market challenges brought about by the rise of other chip manufacturers. In terms of logic chip foundry, TSMC occupies the first position in the global market. In order to surpass TSMC to become the number one company in the field of chip foundry, Samsung has increased its investment in the logic chip business. Although Samsung has a great advantage in memory chips, it has been lagging behind TSMC in the logic chip foundry business. Samsung has the world's most advanced 3nm process technology comparable to TSMC, but lags behind TSMC in terms of product yield and product quality. If Samsung wants to surpass TSMC, it needs to solve the problems of increasing its share of the logic chip foundry market, chip foundry technology, and product quality.
Author 丨 Xu Zihao
Edited by Lian Xiaodong
American editor 丨 Maria