Samsung CEO Kwon Oh-hyun Announces Shock Resignation as Profits Surge

Kwon Oh-hyun’s resignation deepens concerns of a leadership vacuum at the tech giant.

Samsung Electronics Co Ltd ssnlf said on Friday its CEO and Vice Chairman Kwon Oh-hyun plans to step down from management, deepening concerns over a leadership vacuum at the tech giant after group scion Jay Y. Lee was jailed for bribery.

The surprise resignation of Samsung’s chip and display head came as he was expected to take a bigger role following Lee’s arrest in February and the departures of other key executives in the wake of the bribery scandal.

The move came on the same day the South Korean smartphone maker forecast record third-quarter operating profit on the back of the memory chip business which Kwon was instrumental in building into the world leader.

“The timing is nonsensical. Samsung tipped record earnings, it’s going to be better in the fourth-quarter, and all that’s been driven by Kwon’s components business,” said Park Ju-gun, head of research firm CEO Score.

Kwon, 64, is seen as Samsung Group No. 2. As well as being chairman of the board and a board director, he heads the components business – including memory chips – and the display business.

In a statement, the man known as “Mr Chip” said the time had come to “start anew with new sprit and young leadership”.

“We are fortunately making record earnings right now, but this is the fruit of past decisions and investments; we are not able to even get close to finding new growth engines by reading future trends right now,” he added.

The world’s biggest maker of memory chips, smartphones and TVs is set to smash its annual profit record this year, thanks partly to soaring demand for memory chips. Semiconductors were Samsung’s top earner in the three months through June, making a record 8 trillion won ($ 7.20 billion).

The global chip industry is undergoing a major shift with Japan’s Toshiba Corp partnering with home rival SK Hynix, and other firms consolidating in search of new growth areas like artificial intelligence and automobiles.

Shares in Samsung, worth about $ 350 billion, fell 0.6 percent on Friday after hitting an all-time high earlier in the day.

CHANGING THE OLD GUARD

The departure of 32-year Samsung veteran Kwon after five years in the top job comes at a time of leadership uncertainty at the company.

Choi Gee-sung, Jay Lee’s mentor, quit earlier this year for his alleged role in the bribery scandal, and Samsung Electronics now needs to fill several more key roles with Kwon’s exit.

Kwon would serve out his term as chairman of the board and board director until March 2018, the company said. He is also not stepping down immediately from his two other roles.

A Samsung Electronics spokeswoman declined comment on the exact timing of succession and potential successors for Kwon’s roles.

While Samsung Group is South Korea’s top conglomerate with businesses ranging from smartphones to hotels – it has had no ‘Plan B’ for taking big decisions following Lee’s arrest, people familiar with the matter have said.

“I‘m worried about a leadership vacuum at a time when Lee is absent from management,” Chung Sun-sup, chief executive of research firm Chaebul.com, said following Kwon’s announcement.

The leadership changes also could be an opportunity for a new generation to emerge, he added.

Tech

Samsung scion's defense fights back as legal appeal begins

SEOUL (Reuters) – The heir to South Korea’s Samsung Group appeared in a packed court on Thursday for the first day of arguments in the appeal of his five-year jail term for corruption.

The 49-year-old Jay Y. Lee was convicted by a lower court in August of bribing former president Park Geun-hye to help strengthen his control of the crown jewel in the conglomerate, Samsung Electronics, one of the world’s biggest technology companies.

The appellate court hearing the appeal is likely to try to rule on the case by next February, legal experts said. Whichever side loses could take the case to the Supreme Court, the final court of appeal in South Korea.

Lee’s presence marked his first public appearance since the August ruling. He did not speak during the early proceedings other than giving his birth date and address.

The lower court in August had ruled that while Lee never asked for Park’s help directly, the fact that a 2015 merger of two Samsung affiliates did help cement Lee’s control over Samsung Electronics “implied” he was asking for the president’s help to strengthen his control of the firm.

The defense strongly challenged the lower court’s logic that Lee’s actions “implied” solicitation for help from Park by providing financial support for the former president’s close friend and confidante Choi Soon-sil.

The prosecution, which has lodged a cross-appeal against the lower court ruling that found Lee innocent on some charges, said the court’s decision to not acknowledge explicit solicitation for Park’s help from Samsung despite the evidence found “did not make sense”.

DEFENSE FIGHTS BACK

The defense, which spent much of its time during the initial trial refuting the prosecution’s individual charges, is expected to focus on a few key arguments in the appeal – including whether there was in fact an “ordinary type of bribery” as defined under South Korean law, which says only civil servants come under the statute.

Park’s friend Choi was not a civil servant.

The lower court found that Samsung’s financial support of 7.2 billion won ($ 6.27 million) to sponsor the equestrian career of Choi’s daughter constituted an ordinary type of bribery, as “it can be considered the same as she (Park) herself receiving it.”

The defense is expected to strongly challenge this by saying that the prosecution, on whom the burden of proof lies, has not proved collusion between Park and Choi.

Reporting by Joyce Lee; Additional reporting by Heekyong Yang; Editing by Neil Fullick

Tech

How LG and Motorola are assailing Samsung

Since the rise of the original Galaxy S, Samsung has sat atop the Android handset market, furthering its distance over other rivals supporting the operating system over the years. The company’s dominance is particularly impressive when one considers that it is the only successful feature phone company to expand its success in the post-iPhone era.

However, with the company’s smartphone margins declining as smartphone penetration inches higher, the company is seeing reinvigorated competition from two old rival brands from its feature phone days — LG and Motorola. How they are taking on the Android giant represents a study in contrasting strategies. While LG has taken many pages from Samsung’s playbook, Motorola has pursued a strategy that might be called the anti-Samsung approach.

LG, of course, has long been a primary Samsung competitor in both companies’ home country and around the world across a wide array of electronics products for decades. In smartphones, it has taken many of the same steps that Samsung took on its road to market dominance including innovating through hardware components, particularly displays. In the G Flex and G3, the company has introduced curved and quad-HD displays.

LG_G_Watch_500

Lke Samsung, it has put its own skin on Android. And while the LG smartphone family isn’t nearly as broad as Samsung’s, it has continued to keep growing its family of mobile devices with the G Pad and G Watch. Indeed, the second iteration of its Android Wear efforts — the round-faced G Watch R — dramatically improved the lackluster design of the company’s original G Watch launched alongside a similar Samsung effort.

The efforts — along with a big bump in TV advertising focused on succinct messaging — have helped propel LG. According to IDC, LG’s smartphone shipments were up nearly 40 percent while in the third quarter of 2014 while Samsung’s sales dipped eight percent.

Another company that saw growing share in Q3 was Lenovo, which recently completed acquisition of Motorola Mobility, the brand that it plans to carry forward in North America. Unlike Samsung and LG, Motorola hasn’t focused on whizzy curved displays or elaborate skins; indeed, it has not only committed to a “pure Android” experience in its own phones, but seems to have persuaded its partner Verizon to tone down the level of skinning in its Droid phones.

The second generation of Motorola’s flagship — the Moto X — has competitive specs, but hasn’t led the charge in terms of them. However, the company has been making smart moves in a couple of key areas. These include adding value around the core Android experience through gestures, smarter settings and voice activation that still works in more scenarios than Siri under iOS 8 (where the iPhone must be plugged in). Motorola has also been aggressively pursuing the low-end and mid-market with the Moto E and Moto G that tap into the need for lower prices in a non-subsidized carrier landscape.

Verizon Moto X 2014 with Android 5.0

Motorola has also been seeking out new distribution through partnerships. Google, its short-lived parent, chose it as the vendor for the pocket-busting Nexus 6, a one-upping of Apple’s 5.5-inch iPhone 6+ (at least when it comes to screen size). And Motorola’s partnership with Verizon for its Droid lineup is an exclusive one. The carrier’s beastly Droid Turbo beefs up the Moto X with a massive 3900 mAh battery, a waterproof nano-coating that allows for open ports, quick charging, and a 21 megapixel camera with optical image stabilization.

Alas, the company’s lack of traditional strength beyond the Americas has hampered its scale and even a slimmer post-Google Motorola has had difficulty finding profitability. Lenovo should help on both of those fronts.

Neither LG nor Lenovo/Motoroa pose an imminent threat to Samsung, which still commanded a healthy majority of smartphone shipment share of 78 percent in the third quarter according to IDC, Of course, that share is even higher in Android phones and higher still in terms of Android phones that include Google’s services (versus the Android Open Source Platform used by smartphone vendors such as China’s surging Xiaomi and Amazon), But, whether it be trying to beat Samsung at its own game (like LG) or to change the rules (like Motorola), consumers are turning on to alternatives.

How LG and Motorola are assailing Samsung originally published by Gigaom, © copyright 2014.

Continue reading…

Related research and analysis from Gigaom Research:
Subscriber content. Sign up for a free trial.

Cloud

Samsung Open Source IoT Platform Aims to Bridge Connected Devices Gap

samsung artik 300x171 Samsung Open Source IoT Platform Aims to Bridge Connected Devices GapSamsung challenge Intel and Qualcomm with the announcement of three new chips aim at the Internet of Things market. Samsung also announced the launch of SmartThings Open Cloud, which will help developers create the applications using their connected devices.

The Korean manufacturer new Artik platform includes software, development boards, drivers, tools, security features and connectivity cloud, or everything you need to create innovative products and services for the IoT. The line Artik is composed of three SoC chips of different sizes. The whole family of modules, Samsung ARTIK, is characterized by the presence of built-in memory and high computing power as well as advanced safety technologies.

The smaller, Artik 1, measuring about 12 × 12 cm and is powered by a button battery. The chip integrates a dual core processor at 250 MHz, 4 GB of flash memory and a 9-axis motion sensor. It combines an MIPS32-based dual-core processor, 1 MB SRAM, 4MB Flash memory, power management, an encryption engine and a Bluetooth LE Module. It is designed for low-power devices, such as Bluetooth tags, beacons and wearable.

A clocked at 250MHz processor core takes care of demanding workloads while a low-power core with 80 MHz takes less compute-intensive tasks. In addition, the Artik 1 integrated 9-axis motion sensor with a gyroscope, accelerometer, and magnetometer. According to Samsung, it is intended for IoT devices like beacon transmitter, fitness tracker or smart bracelets.

The Artik 5 is manufactured in particular for smart home hubs. It has a dual-core processor on ARM A7 base with 1 GHz, 512 MB ??of DDR3 RAM and 4 GB of flash memory. There are also several security features, wireless support (802.11b/g/n), and encoding and decoding of video.

The most powerful model Artik 10 will power, especially Home Server and personal clouds. It integrates an octa core processor at 1.3 GHz, 2 GB of RAM, and 16 GB of flash memory and can perform the encoding/decoding of 1080p video with 5.1 audio. These chips are already used in mobile products and soon will also be used in smart TV, household appliances connected to the Internet and in all SmartThings devices.

The company says, “These modules focus on device manufacturers and allow a manufacturer to easily create a connected device by using one of a line of ARTIK modules. The combination of ARTIK + SmartThings Open Cloud provides the necessary hardware, software, and services for device makers to build connected devices easily without having to build and operate the entire stack.”

Like other manufacturers, Samsung also sets high hopes for the Internet of Things. Gartner analysts predict that the number of connected devices will rise to 26 billion by 2020, from 900 million in 2009. IDC expects that the IoT market will reach a volume of 3.04 trillion dollars by 2020.

Back in January at the Consumer Electronics Show in Las Vegas, Samsung had announced that 90 percent of all devices manufactured by Samsung – from smartphones to refrigerators – to connect to the Internet by 2017. However, the Artik chip platform aims not only to Samsung’s own devices. Other manufacturer’s processors are also integrating them into their products.


CloudTimes