Samsung CEO Resigns as Tech Giant Forecasts Record Profits

In a surprise move, Samsung announced on Friday that its CEO and vice chairman Kwon Oh-hyun is to step down. Kwon was expected to take a bigger role at the company after de facto leader J Y Lee was arrested and jailed for bribery, but his surprise resignation has deepened concerns of a power vacuum.

“It is something I had been thinking long and hard about for quite some time. It has not been an easy decision, but I feel I can no longer put it off,” Kwon said in a letter sent to employees. “As we are confronted with unprecedented crisis inside out, I believe that time has now come for the company to start anew, with a new spirit and young leadership to better respond to challenges arising from the rapidly changing IT industry.”

The news came on the same day that Samsung forecast record third-quarter operating profit thanks to its thriving memory chip business, which has allowed the South Korean tech giant to brush off a punishing period in 2016 in which the fire-prone Galaxy Note 7 recall made the biggest tech headlines.

Semiconductors were Samsung’s top earner in the three months through June, making a record 8 trillion won ($7.19 billion). While memory chips were responsible for most of Samsung’s profits, its mobile phone business was given a boost by its new Note 8 smartphone which received the company’s highest number of pre-orders.

The timing of the announcement and Kwon’s references to an “unprecedented crisis” suggest that Samsung is gearing up for major changes to its operational structure and internal culture following Lee’s corruption scandal, but the move also increases uncertainty as to who will fill the gap that Kwon leaves.

Kwon has essentially functioned as the number two in Samsung Group, being not only the chairman of the board and a board director, but also head of the components business and Samsung Display. Also known as “Mr Chip”, Kwon was instrumental in making Samsung’s semiconductor business a global leader.

“We are fortunately making record earnings right now, but this is the fruit of past decisions and investments,” continued Kwon in the letter. “We are not able to even get close to finding new growth engines by reading future trends right now.”

Kwon said he will see out his term as chairman of the board and board director until March 2018, and will remain in his two other roles during the same period.

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