Samsung reorganises into two units

[VelMurugan]

Samsung reorganises into two units

SEOUL: South Korean electronics giant Samsung Electronics Co Ltd on Friday reorganised itself into two major groups, joining together its chip and display units and combining the telecom and media businesses.

The shakeup is Samsung's response to the global downturn and a move to reinvigorate the company after Group Chairman Lee Kun-hee stepped down in April last year, analysts and media say.

Current chief executive officer Lee Yoon-woo will assume the additional role of overseeing the combined semiconductor and liquid crystal display (LCD) units, two areas that face the biggest challenges in the ongoing industry slump.

Samsung, the world's biggest maker of memory chips and LCD screens, is struggling as chronic oversupply and falling consumer demand has wiped out profits from the two flagship units, once considered the company's cash cows.

Friday's reshuffle also saw two major Samsung pioneers leave top management. Hwang Chang-gyu, who led Samsung's chip unit from 2000 to its most prosperous years, and Lee Ki-tae, who established Samsung's mobile phone brand as a global name, are leaving the management frontline, according to Samsung Group.

"This may be a signal that, under Lee Yoon-woo's leadership, Samsung will focus more on profitability and efficiency than on production growth and massive investments, which were its trademark in the past," said Jae H Lee, an analyst at Daiwa.

While Samsung is faring better in the television set business, where it remains the world's No. 1, and in mobile phones, where it ranks second behind Finland's Nokia, the outlook is also deteriorating sharply in those areas amid the spreading global downturn.

Samsung's Japanese rival Sony Corp, hit by a stronger yen, last month announced sweeping restructuring to cut 16,000 jobs and save $1.1 billion
in annual costs.

Choi Gee-sung, currently head of the telecommunications business, will oversee the new media and telecom division which includes mobile phones, TVs and other electronic products.

"Investors will want to confirm with their own eyes the competence of the new top management before deciding," said Won Jong-hyuck, a market analyst at SK Securities.

After Lee Kun-hee stepped down, Samsung Electronics replaced its CEO and the head of chip business in May 2008 but analysts said at that time the shakeup would not yield a major change in the way the company was run.

Samsung Electronics shares were up 0.11 per cent at 460,000 won ($330.6) as of 0257 GMT, underperforming a 0.5 per cent rise in the broader market

Source : IndiaTimes