Heads Set To Roll At Samsung As Massive Global Restructure Kicks In

Samsung Electronics is facing a difficult end to 2024 after they recently announced another fall in world and local profits, now heads are set to roll with a massive shakeup coming of senior management with the Company also tipped to use CES to roll out several new powerful AI products.

History shows that Samsung are a resilient Company who in the past, when profits have fallen have recovered after swift action by senior management, however this time things are different with Chinese brands now pressuring Samsung around the world especially in the appliance and TV markets.

ChannelNews remembers when eight years ago Samsung reported a 30% drop in profits after they stopped manufacturing the Galaxy Note 7 due to quality and performance issues.

Immediately earning in the 2016 quarter July to September fell 30 percent, compared to the same period in 2015.

Jong-Hee (JH) Han, Vice Chairman, CEO and Head of Device eXperience (DX) Division at Samsung Electronics.

Samsung said as he time that would focus on “expanding sales of new products and restoring consumer confidence”.

“We have concerns about our fundamental technological competitiveness and the future of the company due to our performance falling short of the market’s expectations,” Samsung’s then Vice Chairman Jun Young-hyun said at the time.

“Many people are talking about Samsung’s crisis. We, who are leading the business, and we are responsible for all of this.”

12 months later they were back launching the Galaxy S8 that went on to be the world’s best-selling Android smartphone model in the second quarter of 2017.

The success of Samsung’s S8 and S8+ smartphones saw the Company deliver 19 million units worldwide that year.

Now they are at a similar crossroads where tough decisions are set to be made about the future of the Company and the future of management running the Company both globally and here in Australia according to sources.

Samsung scientists and engineers are key to the future of the Company

Sales in Australia and worldwide are down, 10% of their workforce in Australia has been let go, with senior management globally now targeted with a massive change tipped over the next three months, with CES 2025 shaping up to be a key event for the Company across their consumer product divisions with several new AI powered products set to be rolled out.

This will be followed by the launch of a new range of Samsung Galaxy S25 products in late January.

The “crisis” facing Samsung globally resulted in the South Korean Company instigating a six-day workweek for executives earlier this year.

That change came after Samsung posted terrible financial results throughout 2023 caused by increased competition and a reduction in chip demand that followed the pandemic highs.

But the AI hype cycle was meant to reverse the company’s fortunes as demonstrated by a 15x increase in profits last quarter, with future growth to be driven by sales of its high-bandwidth memory chips to Nvidia.

“In this year’s year-end personnel reshuffle, Samsung is expected to stick to meritocratic principles with the Company punting on new products and a rationalisation of their manufacturing operations to bring back growth and profitability.

Recently after poor chip sales, Samsung replaced its chip head with an industry veteran, Vice Chairman Jun Young-hyun. This came as a surprise to analysts.

Sources say the chip business division is expected to undergo another round of restructuring following the leadership change.

As for who will get the chop or a shift in positions at the Company, and that includes board members remains wide open.

Recently it was announced that three out of the four internal directors will see their term expire in the first half of next year.

They include Chief Financial Officer Park Hark-kyu, the mobile business chief Roh Tae-moon, and Lee Jung-bae, another top executive at the memory chip business.

According to the Korean Herald, analysts claim the company should also restructure the corporate culture that is heavily focused on executive performance and immediate results, often at the expense of long-term advancement.

At Companies such as LG Electronics Australia Korean management have deliberately cut marketing budgets and people just to prop up the bottom line in the expectation that they will look good when it comes to management reshuffles at the end of the year.

This hinders the company from achieving the necessary sales claims observers including marketing management who have quit after fall outs with senior Korean management.

Analysts claim that “Securing technical leadership should be a priority for Samsung.

Many observers believe that Samsung is “way ahead” in the AI device race especially when it comes to consumer devices such as their smartphones, appliances, and tablets, however they need to keep ahead in this race as competitors such as Apple, LG, and Chinese TV and appliance brands play catch up.

The Company believes that they are in a strong position to outperform struggling rivals such as LG Electronics or Apple in the AI market and that consumers wanting AI in their products should look at where Samsung is at today.

Samsung Electronics Vice Chairman & CEO Han Jong-hee said at IFA in Berlin recently that the company’s home appliances powered by artificial intelligence (AI) still only meet 30 percent of consumers’ expectations, despite the company showcasing some of the most advanced AI home solutions in the industry at IFA.

Han stressed that 2024 marks the first year of the paradigm shift to AI-powered home appliances, and the tech giant has a long journey ahead to meet extremely “high consumer standards.”

“The general perception of AI is that it can do anything you say,” Han said.

“That’s how high consumer standards have become, and products still fall short of meeting their standards. If we consider consumer expectations to be at 100, our product currently stands at about 30. However, with enhanced security and improved natural language recognition, I believe we can raise that to around 60 or 70.”

Talking to the Korean Herald Hwang Yong-sik, a professor from Sejong University College of Business and Economics, claimed that the company should give more power to engineers and appoint strategists to steer the company in the right direction.

“In the past, Samsung was focused on creating a favourable environment for engineers. Now, it is important the company find the right direction through the synergy created between engineers and strategists,” Hwang said, acknowledging employees’ complaints about decisions made by financial experts focused on reducing financial losses.

As one observer said recently “When the going gets tough bean counters are always a problem. This is the time when marketing and product development comes into play, and this is where Samsung should be investing along with the development of new products”.