Samsung Shakes Up Its Gadget Businesses to Focus on Chips

Samsung Shakes Up Its Gadget Businesses to Focus on Chips

In a big reshuffle, Samsung announced on Tuesday plans to merge its mobile and consumer electronics divisions in an effort to consolidate its structure to focus on chip production.

Alongside the news of the restructuring, Samsung also announced the appointment of dual CEOs: Kyung Kye-hyun, the former head of the flash memory chip and technology team, will lead the chip and components division, while Han Jong-hee, formerly the head of visual display business, will serve as co-CEO to helm the newly-established mobile and consumer electronics side of the Seoul-based company.

While Samsung’s mobile growth has stagnated in recent years despite the popularity of the company’s Galaxy brand and trailblazing in foldable phones, its component arm — and most notably its chips — have surged in profitability in recent years, accounting for nearly three-quarters of Samsung’s $US13.4 (A$19) billion operating profit in Q3. According to Reuters, the company also has big plans to invest resources into semiconductors, artificial intelligence, and robotics, and will pour $US206 (A$289) billion into those sectors over the next three years.

According to some analysts, the merger also represents Samsung’s best opportunity yet to fully integrate its services, better positioning the company to offer more streamlined connections between its smartphones and home appliances.

“In the long term, the biggest challenge is forming a platform of Samsung’s own,” Lee Jae-yun, an analyst at Yuanta Securities Korea, told Reuters. “Those businesses have to keep increasing connectivity between devices, but so far it hasn’t been able to create a lasting platform with presence.”

The news comes just a few weeks after Samsung announced plans to invest more than $US17 (A$24) billion in a new semiconductor manufacturing facility in Taylor, Texas, doubling down on plans to become the biggest chip contract manufacturer by 2030 amid a global semiconductor shortage that was driven in part by the COVID-19 pandemic.