Responsible Management

Samsung Electronics vice chairman Lee Jae-yong will be appointed as a director of the board of the company to better deal with the Galaxy Note 7 battery issue and expedite a corporate governance.
Samsung Electronics vice chairman Lee Jae-yong will be appointed as a director of the board of the company to better deal with the Galaxy Note 7 battery issue and expedite a corporate governance.

 

Samsung Electronics vice chairman Lee Jae-yong is to be appointed as a director of the board of the company. The idea is to better deal with the Galaxy Note 7 battery issue and expedite a change in corporate governance and business structures in the Samsung Group as a whole with chairman Lee Kun-hee absent for a long time due to his health problems. 

At this moment, the Galaxy Note 7 battery issue is getting worse and worse. An increasing number of countries are recommending not to use the product in spite of Samsung Electronics’ decision to recall it. This is likely to lead to some difficulties on the part of its smartphone business unit, and then the other divisions such as semiconductor, display and component might have to witness a decline in profits, not to mention consumers’ reliability on the brand of Samsung.

Earlier this year, Samsung Electronics’ operating profit for this year was estimated at 30 trillion won or more based on the popularity of the Galaxy S7, Galaxy S7 Edge and Galaxy Note 7. However, the recent explosion of multiple Galaxy Note 7 batteries has resulted in predictions that the amount for the latter half of this year will decrease by approximately one trillion won. The company’s smartphone sales volume is forecast to fall by about nine million units in comparison to previous estimates with regard to the battery explosion issue alone.

Nevertheless, Samsung Electronics is not going to change its investment plans for this year. Most of the investment is to go to 3D NAND flash and OLED smartphone panel manufacturing. At its conference call in the second quarter, Samsung Electronics announced that its investment for this year would slightly exceed last year’s investment that added up to 25.52 trillion won and the amount for the second half of 2016 would reach 17 trillion won. 


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