SEOUL Three executives in their 50s took over the top posts at Samsung Electronics on Oct. 31, paving the way for imprisoned leader Lee Jae-yong, himself 49, to tighten his grip on the tech conglomerate.
President Kim Ki-nam, 59, was promoted to head the company's device solutions division, which includes Samsung's semiconductor and display businesses. President Kim Hyun-suk, 56, will be in charge of consumer electronics, while 56-year-old Koh Dong-jin will take over Samsung's information technology and mobile division.
While the three will take up their new duties immediately, they will not take the title of chief executive until March, when their predecessors exit the company.
Chief financial officer Lee Sang-hoon, 62, resigned from his post but was recommended for chairman of the board, a position he will take up in March. Currently, Kwon Oh-hyun chairs the nine-member board.
"The next generation of leaders is well-suited to accelerate the pace of innovation and address the demands of the connected world," Kwon said. "They have proven track records with extensive experience and outstanding expertise in their fields."
Kwon, 65, stepped down as chief executive earlier in the month.
Presidents Yoon Boo-keun, 64, who had led the company's consumer electronics division, and Shin Jong-kyun, 61, who had led the mobile division, said they decided to follow Kwon and make way for new leaders.
The appointments come as Vice Chairman Lee Jae-yong serves a five-year prison term for embezzlement, bribery and perjury. Analysts say the new appointments signal that Lee is strengthening his influence over the conglomerate by replacing old executives appointed by Chairman Lee Kun-hee, his ailing father.
"With the shuffle, Vice Chairman Lee aims to inject some fresh air into management, which has been stuck for a long time," said SK Kim, an analyst at Daiwa Capital Markets. "Additional appointments and organizational restructuring are expected, too."
SPLASHING OUT Samsung also said on the same day that it will almost double its capital investments, mainly in the semiconductor business, to meet rising demand for memory chips and exploit the "super cycle" in the sector.
Its investment will reach 46.2 trillion won ($40.8 billion) this year, up from 25.5 trillion won a year ago. The semiconductor business will draw the most investment at 29.5 trillion won, followed by the display business at 14.1 trillion won.
"For memory, we are expanding the Pyeongtaek 1 production line to meet rising V-NAND demand," the company said, referring to vertical NAND, a more advanced version of conventional NAND memory. "We are also investing in 10-nanometer foundry production lines."
The company's newest chip factory is in the western South Korean city of Pyeongtaek, and the focus of the heavy investment is on fourth-generation V-NAND chips.
"We will invest in semiconductors with a long-term strategy," said Lee Myung-jin, head of Samsung Electronics' investor relations group. "We are not just expecting high growth for next year. We are looking beyond this, considering two to three years," he added.
The announcement comes as strong semiconductor performance helped the company post record earnings in the third quarter, offsetting dwindling profits from the consumer electronics segment.
South Korea's largest company said operating profit reached 14.53 trillion won in the July-September period, up 179% from 5.2 trillion won a year ago. Sales jumped 30% to 62.05 trillion won during the same period, with net profit attributable to shareholders soaring 150% to 11.03 trillion won.
The company also announced its dividend policy for the next three years. It will increase its total dividend payout by 20% to 4.8 trillion won this year from a year ago. In 2018, it will double the dividend to 9.6 trillion, and maintain that level in 2019 and 2020.