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Samsung leader stable after heart attack

Mark Scott and Brian X. Chen
Lee Kun Hee, chairman of Samsung Group.
Seong Joon Cho | Bloomberg | Getty Images

The chairman of Samsung Electronics, Lee Kun-hee, who helped transform the business into a technology giant, was in stable condition Sunday after suffering a heart attack, the company said.

Mr. Lee, 72, was recovering at Samsung Medical Center in Seoul, said the company, which declined to comment further on his condition. According to Reuters, he was admitted to a hospital Saturday night before being transferred to the medical center.

While he has not directly overseen many of Samsung's products, including its popular smartphones, Mr. Lee is credited with shaping Samsung into one of the most profitable consumer electronics companies in the world. The company is now a leader in smartphones and flat-screen televisions, as well as semiconductors and washing machines.

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Mr. Lee has previously been treated for lung cancer and pneumonia, and his latest health problem will almost certainly renew calls for a concrete succession plan. His son, Lee Jae-yong, who served as the company's chief operating officer until 2012 and is now the Samsung's vice chairman, is widely expected to eventually take over from his father.

Though the elder Mr. Lee's contributions to Samsung have been vital, the implications to Samsung of his declining health do not seem to carry as much weight as they might at other companies. At Apple, for instance, its former chief executive Steven P. Jobs had a hands-on role in the company's creations and inventions, and his death raised concerns among investors that the company might not continue to produce successful, innovative products.

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By contrast, Samsung, a South Korean company, does not lean so heavily on just one person's vision. Instead, the group is a huge and complex organization with many executives overseeing each different part of the company. That includes J. K. Shin, who as one of three chief executives at Samsung Electronics, runs the mobile device division, and Kim Hyun-suk, another executive, who heads the company's television business.

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Chetan Sharma, an independent telecommunications analyst who also acts as a consultant to phone companies, underscored the contrast between Mr. Lee's role at Samsung and that of Mr. Jobs at Apple.

"Steve was the driving force behind all the products down to the last detail," Mr. Sharma said. At Samsung, "there are many senior executives who can step in and the world won't notice."

Mr. Sharma added, "While Mr. Lee built an empire in Samsung, he isn't identified with the brand or the products as Mr. Jobs was with Apple."

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Still, Samsung's strong position in the smartphone market, which has helped cement its reputation as a global powerhouse, is now being challenged by new low-cost rivals from China and on the high end by Apple.

Samsung remains one of the few handset makers to profit from selling smartphones, with its phones like the Galaxy S5 winning over critics and consumers. Yet last month, the company reported its lowest quarterly sales in over a year at its handset unit, which generated more than three-quarters of Samsung's operating income.

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The company also has been fighting a bitter legal battle with Apple over copyright infringement claims, and is facing tough competition from Chinese rivals like Huawei and Xiaomi in fast-growing emerging markets.

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In response, Samsung has been branching out into new areas like wearable devices and tablets in an effort to protect itself from the competition.

Although Mr. Lee, a billionaire, is not directly overseeing the creation of products, he remains a powerful figure at the company and plays a key role in the company's strategic plans. He is also chairman of the Samsung Group, the conglomerate that includes Samsung Electronics and is also involved in financial services, among other businesses. Mr. Lee and his three children control more than 70 companies connected to the Samsung Group.

Mr. Lee and Samsung have been known for their aggressive tactics since 1987, when Mr. Lee succeeded his father as chairman.

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Over the last 15 years, Samsung's share price has risen almost 400 percent on consumers' seemingly insatiable appetite for its products.

Investors, however, are growing wary of the company's future plans, and some want the tech giant to return part of its large cash stockpile, which topped more than $50 billion at the end of last year.

Samsung's share price has fallen almost 9 percent in the last 12 months, as shareholders fret over its future growth prospects. The company says it will reinvest its large cash war chest in research and development projects and in new sectors like health care.