The CEO and vice chair of Samsung Electronics Ltd. announced Friday that he plans to step down, deepening a potential leadership vacuum at the tech giant even as profits are soaring.
Kwon Oh-hyun, who runs the Korean firm’s chip and display division and has worked for Samsung in one capacity or another for 32 years, said in an Oct. 13 statement that he believed in light of former head Jay Y. Lee’s recent conviction for bribery charges and the related resignation of several board members, including Lee’s mentor Choi Gee-sung, the smartphone maker “needs a new leader more than ever” and that it was time for him to move onto the “next chapter” of his life.
“It has not been an easy decision, but I feel I can no longer put it off,” Kwon said in the statement. “As we are confronted with unprecedented crisis inside [and] 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.”
The resignation came as surprise to many Samsung shareholders and analysts, according to Reuters, since Kwon had been widely expected to take on a larger role following Lee’s conviction.
In fact, Kwon announced his departure the same day Samsung forecast record third-quarter profits of 14.5 trillion won (approximately $16.1 billion Canadian), driven by the memory chip business he helped develop.
“The timing is nonsensical,” Reuters quotes Park Ju-gun, head of research firm CEO Score, as saying. “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.”
But it would appear the 64-year-old Kwon is pessimistic about this success too: According to Reuters, he said that “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.”
The quote does not appear on Samsung’s website.
According to Samsung, Kwon has promised to serve the rest of his term as the company’s chairman of the board and board director until March 2018, when his current term ends, and is not stepping down immediately from his CEO or vice chair roles either, though no firm date for his departure was given. A Samsung spokesperson declined to comment on exact timing or potential successors when asked by Reuters.
According to the news agency, despite being South Korea’s top conglomerate, with businesses ranging from smartphones to hotels, Samsung Group had no back-up plans following Lee’s arrest.
Lee was convicted of bribing former South Korean President Park Geun-hye and sentenced to five years for bribery, hiding assets abroad, embezzlement, and perjury in August.