On Tuesday, Samsung Electronics announced that it will combine its mobile and consumer electronics businesses, designating new co-chief executives in the company’s biggest change since 2017, in order to simplify its structure and focus on the logic chip business.
The South Korean firm will be led by two co-chief executives, rather than three, as it pivots on the two core pillars of chips and consumer products, such as smartphones, to help drive the next phase of growth and increase competitiveness.
Samsung (SSNLF), whose Galaxy flagship brand helped it become the world’s largest smartphone manufacturer by volume, is attempting to resuscitate faltering mobile growth, which contributed only 21% of profits last quarter, down from almost 70% in the early 2010s.
Instead, thanks to a surge in data storage and a recent shortfall of global semiconductor supplies, its component business, led by chips, has become the most profitable. Last quarter, the business accounted for roughly three-quarters of Samsung’s operating profit of 15.8 trillion won ($13.4 billion).
Han Jong-hee, the leader of Samsung’s visual display business, will become a co-CEO, managing the newly merged division encompassing mobile and consumer electronics while also continuing to run the television business, according to the company. Han rose through the ranks of Samsung’s visual display division despite having no prior expertise with mobile.
Although it is unclear what changes or divisions of labour Han would bring to Samsung, analysts believe the reorganisation will help the company address difficulties such as providing seamless connected services between its smartphones and home appliances.
“In the long term, the biggest challenge is forming a platform of Samsung’s own,” said Lee Jae-yun, an analyst at Yuanta Securities Korea.
“Those businesses have to keep increasing connectivity between devices, but so far it hasn’t been able to create a lasting platform with presence.”