Samsung prioritizes semiconductors, plans Texas site after escaping ‘paralysis’ in Seoul

by WorldTribune Staff, December 7, 2021

With an eye on competing for supremacy in the lucrative chip-making industry with a new facility in Texas, South Korea-based Samsung Electronics Co. has replaced the heads of its three major business units and merged the company’s mobile and consumer electronics businesses into a single unit.

Samsung Vice Chairman Lee Jae-Yong leaves the Seoul Detention Center on parole in Uiwang, South Korea on Aug. 13. / Reuters

Samsung, the world’s largest producer of smartphones, televisions and semiconductors, “has ambitious investment plans to compete against Taiwan Semiconductor Manufacturing Co. on advanced chipmaking, while striving to fend off Chinese rivals with phones and other gadgets,” Jiyoung Sohn noted in a Dec. 6 report for the Wall Street Journal.

The tech giant announced that Kyung Kye-Hyun will lead its components business while Han Jong-Hee, 59 will run the combined mobile and consumer-electronics unit.

Industry analysts said that Samsung made the moves to ensure continuity as its de facto leader, Lee Jae-Yong, was imprisoned on questionable charges of bribing South Korea’s ex-president.

Lee, the grandson of Samsung’s founder, was released on parole in August.

“All major decisions require his signoff,” Sohn noted. “Lee’s supporters argued Samsung had been in a state of corporate paralysis during his absence.”

Days after Lee was released from prison, Samsung said it would invest more than $205 billion over the next three years with semiconductors a priority. That includes a $17 billion investment to build a new chip-making factory in Taylor, Texas.

Related: Seoul’s wannabe socialist government targets Samsung, a major player in 5G tech revolution, June 15, 2020

“The combining of the mobile and consumer-electronics units acknowledges how the sources of the company’s profits have shifted over the years. In the early 2000s, flat-screen TVs propelled performance, then smartphones were the cash cow for much of the 2010s. Semiconductors are powering results now,” Sohn noted.

Samsung has benefited greatly from extra pricing strength during the global chip shortage. The company reported record quarterly revenue of 73.98 trillion won, or the equivalent of about $62.7 billion. About three-quarters of the company’s operating profit came from its components division.

Samsung switched to a multiple-CEO structure in 2013. At that time, “the South Korean firm was embroiled in patent litigation with Apple Inc. over smartphones, while its consumer electronics unit was becoming more formidable,” Sohn noted.

“By splitting the company into three separate units, Samsung’s phones and appliances units could avoid a potential conflict of interest with its components business — which sold parts to Apple and other electronics rivals, industry analysts said at the time.”

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