Samsung just completely shook up its leadership

Key Points
  • Samsung appointed Kinam Kim to replace the company's Vice Chairman and CEO Oh-Hyun Kwon who said he will step down from management
  • In other leadership changes, Hyunsuk Kim will head the consumer electronics business and Dongjin Koh will lead the IT and mobile communications division
  • Earlier in the day, Samsung announced record profits for the third quarter
Jung Yeon-je | AFP | Getty Images

Samsung Electronics announced a shakeup of its leadership on Tuesday and said it will maintain its current three co-CEO management structure.

Kinam Kim will replace the company's Vice Chairman and CEO Oh-Hyun Kwon who earlier this month announced his decision to step down from management. Kim will head the device solutions business.

Kim served as the president of the semiconductor business at Samsung and is a seasoned veteran at the company, having joined in 1981. He led developments of various memory technologies and is said to have been Kwon's "right-hand man" in Samsung's hierarchy.

In other leadership changes, Hyunsuk Kim will replace Boo-Keun Yoon as president and head of the consumer electronics business. Hyunsuk Kim previously served as the head of Samsung's visual display business.

Meanwhile Dongjin Koh will take over from Jong-Kyun Shin as president and head of the IT and mobile communications business — the division that oversees Samsung's family of smartphones.

Koh oversaw the development of Samsung's flagship Galaxy smartphones and was responsible for the turnaround efforts following the botched Galaxy Note 7 launch last year.

Boo-Keun Yoon and Jong-Kyun Shin said they have decided to follow Kwon and make way for new leaders, according to Samsung.

The new appointments are effective immediately.

Meanwhile, Sang-Hoon Lee leaves his position as the company's chief financial officer, effective immediately. Samsung said Lee has been "recommended by outside Board members to be Chairman of the Board and succeed Mr. Kwon next March."

Samsung's management structure a market focus: pro
Samsung's management structure a market focus: pro

Samsung said that would be the first time it will separate the chairman of the board and the CEO roles.

Sarah Lien, client portfolio manager at Eastspring Investments, told CNBC's "Capital Connection" that the move to separate the roles of the chairman and CEOs were a step "in the right direction" for corporate governance reforms.

Earlier this month, Samsung said Kwon will not seek re-election onto the Samsung board once his current term ends in March, 2018. In a letter to employees, Kwon said the time was right for Samsung to "start anew, with a new spirit and young leadership" to better respond to challenges from the rapidly changing technology landscape.

Following the imprisonment of Jay Y. Lee, the heir to Samsung Group, on charges of bribery and embezzlement, Kwon had been the company's de-facto chief. In August, a South Korean court sentenced Lee to a five-year jail term, but he is currently appealing the decision.

"Samsung has very many seasoned veterans who will get promoted as a result of the executive shuffling," Patrick Moorhead, president and principal analyst at Moor Insights and Strategy, told CNBC before the decisions were announced. He added, "I do think Samsung needs to make sure that at least one of the replacements has a long-term vision for the company."

According to Daniel Yoo, head of the global strategy team at Kiwoom Securities, some Samsung watchers were concerned that Kinam Kim's appointment might see the tech giant aggressively increase production of DRAM memory chips.

An aggressive ramp up in production for those chips would help the South Korean behemoth gain market share, but it would likely depress the high prices Samsung now gets for its products. That's why there's some consternation about what increased chipmaking could mean.

Kim, Yoo predicted, is unlikely to implement an aggressive production increase "due to competition that might rise from China and Taiwan."

Yoo added that semiconductor producers like Samsung are set to enjoy higher prices at least until the fourth quarter of 2018 due to growing demand — not just from PC makers and mobile devices, but also from other technologies like artificial intelligence.

Samsung Electronics on Tuesday announced record profits for the third quarter, benefiting from strong demand for memory chips used in mobile devices and servers.