In a surprise move - and just months after the grandson of the company’s founder was jailed for corruption - the CEO of Samsung, Kwon Oh-hyun has resigned 'to make way for new leadership'. In an odd turn of events, despite record profits, Kwon warned the company faces an "unprecedented crisis."
Kwon had emerged as the public face of Samsung Electronics after Jay Y. Lee, grandson of the company’s founder, was detained on corruption charges and then sentenced to five years in prison in August amid a scandal that brought down South Korea’s president.
The share price slipped on the news...
As Bloomberg reports, Kwon Oh-hyun, who also serves as co-vice chairman, announced his retirement on Friday as the Suwon-based company reported record operating income of 14.5 trillion won ($12.8 billion) on booming demand for displays and memory chips.
He said the company faces an “unprecedented crisis” despite the financial success.
“As we are confronted with unprecedented crisis inside out, I believe that time has now come for the company start anew, with a new spirit and young leadership to better respond to challenges arising from the rapidly changing IT industry,” Kwon said in the statement.
While the latest financial results show Samsung’s business units operating smoothly, that in itself may present risks for Kwon, said Park Ju-gun, who tracks corporate executives at CEOScore.
“Nobody wants to be the chief of Samsung Electronics at a time like this; it’s too risky,” said Park.
“It puts that person at odds with the controlling family. Only when he is in the shadow is he playing his role properly.”
Despite the trial, the company’s business has remained robust, helped by strong demand for memory chips.
“It’s the chip prices that are driving up the profit rather than the sales volumes,” said Park Kang-ho, an analyst at Daishin Securities. “We’re expecting an operating profit of about 16 trillion won in the next quarter.”