[Chairman Lee Jae-yong's Inauguration] Determined to Overcome on a Day of Halved Earnings: "Save Samsung in Crisis"

Samsung Electronics Q3 Earnings Announcement and Chairman Lee Jae-yong's Inauguration

[Asia Economy Reporter Park Sun-mi] Samsung Electronics Vice Chairman Lee Jae-yong was promoted to chairman on the 27th. It is the first time in 10 years since he was promoted to vice chairman in 2012. His inauguration as chairman on the day Samsung announced a halving of its semiconductor performance in the third quarter is interpreted as a strong will to take responsibility and overcome the crisis in a situation facing unprecedented challenges. It is also expected that Lee Jae-yong’s vision for a ‘New Samsung’ will quickly take shape.

Samsung Electronics announced that its board of directors held a meeting that day and resolved to promote Vice Chairman Lee Jae-yong to chairman. The Samsung Electronics board judged that, amid worsening global external conditions, ▲strengthening responsible management ▲enhancing management stability ▲and swift and bold decision-making were urgently needed, and thus made this resolution. The proposal for Lee’s promotion to chairman was initiated by Kim Han-jo, the chairman of the board and an outside director, and was resolved after discussions by the board consisting of nine members, including four outside directors and five inside directors.

On the same day, Chairman Lee posted his thoughts and determination on the company’s internal bulletin board, saying, “Let’s create together a true top-tier company beyond today’s Samsung, a company loved by the people and the world,” and declared, “I will stand at the forefront of that.”

Since the sudden collapse of the late Chairman Lee Kun-hee in 2014, Lee Jae-yong has effectively served as the head of Samsung Electronics, but due to legal risks, he could not assume the chairman position. With the special pardon on Liberation Day in August, his employment restrictions were lifted, opening the way for his full return to management and promotion to chairman.

The promotion to chairman was decided amid a global economic environment full of uncertainties, where domestic companies including Samsung are struggling to grow. In particular, it is interpreted that the decision was influenced by the urgent need to set a new direction to overcome the limitations of Samsung being unable to break free from the business frameworks?such as home appliances, mobile phones, and semiconductors?developed and grown by previous chairmen, and to transform into a ‘New Samsung.’

Accordingly, just as the late Chairman Lee Kun-hee transformed Samsung Korea into Samsung Global through his ‘New Management Declaration,’ Chairman Lee Jae-yong is expected to actively begin concretizing plans to develop Samsung’s future with a new vision of ‘New Samsung.’

Meanwhile, Samsung Electronics announced its semiconductor performance for the third quarter, which was halved. As profits in the memory semiconductor sector, which had driven growth, sharply declined, Samsung Electronics’ overall operating profit for the third quarter shrank by more than 30%, marking a bitter record of negative growth for the first time in about three years.

On a consolidated basis for the third quarter, Samsung recorded sales of 76.78 trillion won and operating profit of 10.85 trillion won. Sales surpassed 70 trillion won for five consecutive quarters and set a record high for the third quarter. Although sales decreased by 0.55% compared to the second quarter, they grew by 3.79% compared to the same period last year. With cumulative sales from the first to third quarters reaching 231.77 trillion won, if sales of around 70 trillion won are achieved in the fourth quarter, Samsung Electronics will open the era of 300 trillion won in sales for the first time.

On the other hand, profitability deteriorated significantly. Operating profit for the third quarter shrank by 23.02% compared to the previous quarter and by 31.39% compared to the same period last year. Operating profit fell below 11 trillion won, marking negative growth compared to the previous year’s quarter for the first time in about three years. The operating profit margin dropped 4.1 percentage points from the previous quarter to 14.1%.

The more than 30% drop in operating profit was largely due to the worsening profitability of the semiconductor (DS) division, which accounted for nearly 60% of last year’s total operating profit. The DS division’s operating profit for the third quarter was 5.12 trillion won, halving compared to 10.06 trillion won in the previous quarter. Despite the decline in operating profit, Samsung Electronics decided to continue investments for growth as planned without reducing production. The annual facility investment scale for this year is expected to be around 54 trillion won.

Meanwhile, Samsung Electronics also decided on a quarterly cash dividend of 361 won per common and preferred share. The total dividend amount is 2.45215359 trillion won, with the dividend record date set as September 30.

This content was produced with the assistance of AI translation services.