Samsung Reshuffles Leadership Amid AI Chip Challenges and Legal Troubles

Samsung reshuffles leadership amid challenge in AI chips

Samsung Electronics reshuffled its leadership on Wednesday as it looks to gain an edge in the production of microchips used for artificial intelligence servers. The world's largest memory chip maker issued a rare apology in October, acknowledging it was facing a "crisis" and that questions had arisen about its "fundamental technological competitiveness and the future of the company". On Wednesday it tapped vice-chairman Jun Young-hyun to lead its memory business and appointed Han Jin-man, who headed the firm's US chips business, as the new boss of the chip foundry division. The reshuffle aims to "strengthen the company's growth and future competitiveness, focusing on the semiconductor business", Samsung said in a statement. While the firm posted a 277 percent rise in operating profits to $6.6 billion year-on-year in the third quarter, it missed market expectations. Its shares have fallen more than 27 percent this year. Samsung has lagged South Korean rival SK Hynix in producing high-bandwidth memory (HBM) chips used in AI chipsets and has struggled to secure certification from US titan Nvidia for its latest products. The delayed approval process has allowed Samsung's competitors to challenge its position in the fast-evolving market. The leadership change comes as chairman Lee Jae-yong faces legal challenges. Prosecutors this week demanded a court sentence him to five years in prison over a controversial 2015 merger of two affiliates that consolidated his control over the Samsung group. They say that Lee committed multiple crimes, including stock price manipulation, breach of trust and accounting fraud during the tie-up of construction and engineering firm Samsung C&T and Cheil Industries. Lee was acquitted in a lower court, which prosecutors appealed. A verdict on that is expected in February. Lee, who has already served jail time over a high-level fraud and embezzlement case, is the current executive chairman of Samsung Electronics, the crown jewel of the sprawling Samsung group.

Samsung reshuffles leadership amid challenge in AI chips

SEOUL (AFP) - Samsung Electronics reshuffled its leadership on Wednesday as it looks to gain an edge in the production of microchips used for artificial intelligence servers. The world's largest memory chip maker issued a rare apology in October, acknowledging it was facing a "crisis" and that questions had arisen about its "fundamental technological competitiveness and the future of the company". On Wednesday it tapped vice-chairman Jun Young-hyun to lead its memory business and appointed Han Jin-man, who headed the firm's US chips business, as the new boss of the chip foundry division. The reshuffle aims to "strengthen the company's growth and future competitiveness, focusing on the semiconductor business", Samsung said in a statement. While the firm posted a 277 per cent rise in operating profits to USD6.6 billion year-on-year in the third quarter, it missed market expectations. Its shares have fallen more than 27 percent this year. Samsung has lagged South Korean rival SK hynix in producing high-bandwidth memory (HBM) chips used in AI chipsets and has struggled to secure certification from US titan Nvidia for its latest products. The delayed approval process has allowed Samsung's competitors to challenge its position in the fast-evolving market. The leadership change comes as chairman Lee Jae-yong faces legal challenges. Prosecutors this week demanded a court sentence him to five years in prison over a controversial 2015 merger of two affiliates that consolidated his control over the Samsung group. They say that Lee committed multiple crimes, including stock price manipulation, breach of trust and accounting fraud during the tie-up of construction and engineering firm Samsung C&T and Cheil Industries. Lee was acquitted in a lower court, which prosecutors appealed. A verdict on that is expected in February. Lee, who has already served jail time over a high-level fraud and embezzlement case, is the current executive chairman of Samsung Electronics, the crown jewel of the sprawling Samsung group.

Samsung announces second shake-up of struggling chip business

Samsung Electronics has announced the second management shake-up of its chip division this year, illustrating the turmoil at the South Korean tech giant as it faces growing concern over its technological competitiveness in advanced memory chips used in artificial intelligence hardware. Jun Young-hyun, who was installed as head of the semiconductor unit in the previous reshuffle in May and has acknowledged the company's "chip crisis", will serve as the new head of its memory chip business and co-chief executive. This gives Jun direct oversight of the memory chip business. Among other changes, executive vice-president Han Jin-man, previously in charge of Samsung's US semiconductor business, was promoted to lead its struggling foundry unit, which makes chips for third parties. Wednesday's moves come as the world's largest memory chipmaker faces growing investor concern about its poor performance in advanced AI memory chips, as well as increasing losses in the contract chipmaking business as it struggles to close the gap on market leader TSMC. The highly anticipated reshuffle at the top of the world's largest memory chipmaker came after Samsung's hereditary chair Lee Jae-yong this week publicly acknowledged for the first time "the grave concerns about the future of Samsung". "The reality we are facing is more challenging than ever, but we will overcome the current difficult situation and take a step forward," Lee said on Monday during his latest criminal trial. Analysts said Samsung's reshuffle was "disappointing", as the tech group was continuing to rely on existing veterans rather than bringing in external talent. "It seems difficult for Lee Jae-yong to overhaul the organisation to boost the company's performance, as he is still wrestling with his legal cases," said Park Ju-geun, head of Seoul-based research group Leaders Index. "I doubt if Samsung can push for reform with this relatively small reshuffle." But he added: "Jun also serving as the head of the memory business can streamline the decision-making process and may help accelerate tech development." Prosecutors are seeking a five-year jail term for Lee, as they appeal against his acquittal in February of accounting fraud and stock manipulation relating to the controversial merger of two key affiliates to help cement his control over Samsung Electronics. "I will do everything in my power to ensure that Samsung can, once again, become a company beloved by the people," Lee told the court. "I humbly ask for the opportunity to focus entirely on this mission." Jun had already made a rare public apology last month for the company's poor performance after Samsung's semiconductor business reported a 40 per cent quarter-on-quarter decline in July to September operating profit. Samsung's share price has fallen more than 25 per cent so far this year as it lags smaller crosstown rival SK Hynix in the race to produce high bandwidth memory chips used in Nvidia's AI hardware. Samsung shares fell 2.9 per cent on Wednesday afternoon, underperforming the benchmark Kospi index, which was little changed. The election of Donald Trump as the next US president has also raised the prospect of tightened restrictions on transfers of equipment and sales of advanced memory chips to China, where Samsung operates the world's largest Nand flash manufacturing facility. Trump nominees have also raised questions over US subsidies provisionally granted to foreign chipmakers by Joe Biden's outgoing administration. Vivek Ramaswamy, nominated by Trump to co-head a new Department of Government Efficiency, this week strongly criticised the "wasteful subsidies" being offered by the Biden administration under its flagship Chips Act, through which Samsung is set to receive up to $6.4bn in funding for its investments in chipmaking and advanced packaging facilities in Texas.