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While Samsung Electronics Splits into Two Divisions

In a stunning development, the Samsung Group has literally replaced all of its most senior executives, according to a report by the Korea Herald.

The Samsung Group is South Korea's largest chaebol, consisting of over fifty companies including Samsung Electronics, Samsung Heavy Industries, Samsung Petrochemicals, Samsung Medical, and Samsung Life Insurance. It also owns Sungkyunkwan University.

All of its most senior executives over age 60 were replaced, except for two Presidents who were promoted to Vice-Chairs. Twenty-five Presidents and Vice-Chairmen out of forty-six were replaced with younger executives.

"Age was the biggest criteria in the reshuffle," Yoon Soon-bong, Vice-Chair of the Samsung Group was quoted as saying at a press briefing.

The Group is desperate to reorganize after the resignation of its former Chairman Lee Kun-hee last April in the wake of a corruption scandal that led to his indictment on tax evasion and breach of trust charges.  He was eventually convicted and handed a suspended prison sentence. The shuffle sets the stage for Lee Jae-yong, Lee Kun-hee's son, to take over as Chairman of Samsung Group in the near future. The position of Chairman of Samsung Group is currently unfilled.

Samsung Electronics, the most important of all Samsung companies, is to be split into two divisions. It was previously organized loosely into Digital Media, Semiconductor, Telecommunications Network, and Digital Appliance groups.

Device Solutions Division

This division will be led by current Samsung Electronics Vice-Chair and CEO Lee Yoon-woo. Focusing mostly on component level products, it will be the world's top supplier of NAND flash memory, DRAM chips, and LCD panels for laptops, computer monitors, and televisions.

Other key areas are optical disc drives and hard disk drives, radio frequency transceivers, CMOS image sensors, and numerous other semiconductor components.

Samsung Electronics is currently the only profitable DRAM manufacturer in the world.

Digital Media and Communications Division

This division will be led by Choi Gee-sung, currently President of Telecommunications for Samsung Electronics. The primary focus will be on consumer electronics. This division will be the world's second largest supplier of mobile phones at 17.1 percent, second only to Nokia.

Samsung Television is currently the world's number one television brand. Samsung monitors, computers and printers will also be sold and marketed through this division.

Samsung is also a leader in digital cameras, digital camcorders, DVRs, Blu-Ray and DVD players, and MP3 players.

Samsung Group's home appliances company, including air conditioners, fridges, and air purifiers was recently incorporated into Samsung Electronics, and will be slotted into this division.

Further streamlining of manufacturing operations and other changes are expected to follow in the next few weeks. Samsung has major facilities in South Korea, China, Mexico, Brazil, Hungary, Indonesia, Slovakia, and the Philippines.

Next week Samsung is expected to reshuffle and reassign other executives in order to fill gaps created by these changes.  It has already been announced that salaries for approximately 1600 executives in 59 affiliates will be cut anywhere from 10 to 20 percent.
 
"There has been a sense of crisis in the company for more than a year," said one anonymous manager. "Radical change is in store."



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Age?
By stevenplatt on 1/17/2009 9:28:29 AM , Rating: 3
Seriously? What is it about being over 60 that makes you incapable of doing your job? Im hoping there is more to this story.




RE: Age?
By sld on 1/17/2009 9:36:09 AM , Rating: 3
I'm guessing cronyism.


RE: Age?
By michael2k on 1/17/2009 11:03:57 AM , Rating: 2
In a role such as president, age may also correlate with conservatism. Look at the US presidential election as an example. I would be surprised if these positions needed more risk takers.


RE: Age?
By dj LiTh on 1/17/2009 11:16:28 AM , Rating: 2
You have a good point, but this is a tech company. Out with the old and in with the new? It will be quite a while until we see if this is a good choice or not, but at the very least i'm glad to see execs getting the axe first rather than the hard working employee's. In fact by the sound of the article it seems like they promoted some of those hardworking employee's to replace the fat cats upstairs.


RE: Age?
By Deadtrees on 1/17/2009 11:49:56 PM , Rating: 5
Those are guys who grew up with Lee Kun-hee. Now that Lee Kun-hee is gone (though his power remains,) Samsung needs to get rid of those old faces so that the power transition to Lee Jae-Yong(Lee Kun-Hee's son) won't be jeopardized.


RE: Age?
By nstott on 1/21/2009 2:14:10 AM , Rating: 2
There is a lot more to the story with regards to that. I'm an American, and I work for Samsung in Korea and speak Korean. The old Korean business culture is the problem, and Samsung has been trying to change it for some time with little success. Putting in younger executives with western education and experience will help to promote positive changes in the business culture here. I'm sorry for not putting in more specifics, but it would be too hard to do without including pages of ranting and venting of my frustrations.


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