Samsung Group Holds On To Mobile Division Head JK Shin, Despite Falling Profits

Samsung Electronics has decided to hold on to the head of its mobile division, amid speculation about his departure, despite a sharp fall in the division’s profits. Shin Jong-kyun, or J.K. Shin as he is better known, was expected to be among the casualties in a company-wide annual reshuffle aimed at restoring profitability.

Samsung, once the leader in mobile phone sales around the world, has had a rough year, coping with upstart Chinese companies that are stealing market share in its major markets with low-cost yet feature-heavy phones. The company is also attempting to stabilize its senior management after Chairman Lee Kun-hee was hospitalized after a heart attack in May. Media reports last week had suggested employees were nervous in anticipation of a major reshuffle following a weak performance that delivered its lowest earnings in three years.

Shin is now expected to lead a much smaller team while the company, which is currently being led by Lee’s son Jay Y. Lee, will announce a reorganization of its various divisions next week, according to The Associated Press (AP).

"With Samsung undergoing major changes in the midst of the succession process, like selling affiliates and listing units, it would have been too unsettling to change leadership," Chung Sun-sup, head of local research firm Chaebul.com, said, according to Reuters, adding: “And without a signal that Chairman Lee Kun-hee has stepped back for good, it might have been too much for Vice Chairman Jay Y. Lee to change the people his father put in position.”

Samsung currently faces competition from rivals like Apple Inc., and companies like China’s Xiaomi Technology Co Ltd. While Samsung's mobile division once contributed 60 percent to the company’s overall profits, it accounted for less than half of all profits this quarter, amid growing competition for the Galaxy smartphone range, AP reported. Sales at Samsung’s mobile division saw a fall of 15 percent compared to the previous quarter, according to the company.

Samsung’s mobile business also saw Won-Pyo Hong, the former head of the Media Solution Center, move on to lead the global marketing team, AP reported. The move suggests a shift in focus from the center, which was intended to enhance the quality of applications on Galaxy phones.

Lee June, the group's senior vice president, said, according to Reuters, that Shin is “a major contributor in Samsung Electronics' emergence as the top global player in the handsets business,” adding that he would soon improve the division’s performance.