Lee Jae-yong, who was promoted from vice chairman to chairman of Samsung Electronics on October 27, has been given the tough task of managing Samsung Group as it faces multiple challenges such as a chip market downturn, legal risks, and innovation.
For this reason, industry experts emphasized that Lee needs to add directors who can discuss the direction of the industry fiercely on the board of directors of chip manufacturers, and at the same time allow the middle management to discover rapidly changing global trends.
He said the chairman should focus on diversifying the product portfolio of Samsung Electronics, which still relies heavily on memory chips, and overhauling the group’s governance structure. This way it can be strengthened the base of his domination.
Moreover, Samsung Electronics primarily focuses on semiconductors, mobile devices, home appliances, televisions, and displays. The portfolio built under the late chairman Lee Kun-hee, father of Lee Jae-yong, is stable, but industry analysts said the younger Lee may need to discover new growth engines through acquisitions and grow and develop its chip foundry business.
“In terms of credit challenges, Samsung Electronics is still highly dependent on the memory chip business as its main earnings and cash flow driver. This segment, though, remains a deeply cyclical business and requires substantial capital spending to support technology migration,” Gloria Tsuen, vice president, and senior credit officer of Moody’s, told The Korea Times. “