Samsung Electronics Names Chip Business Head Kwon as CEO

Samsung Electronics Co. (005930), Asia’s largest electronics maker, named Kwon Oh Hyun, head of the company’s display and chip business, as chief executive officer after his division led the company out of an industry downturn.

Kwon, who was promoted to vice chairman in December, will handle broader corporate matters in addition to running its component business, Samsung Group, parent of the electronics maker, said in a statement today. Outgoing CEO Choi Gee Sung will lead the group’s strategy office, according to the statement from the Suwon, South Korea-based company.

Kwon helped Samsung, the top maker of computer-memory chips, weather a slump last year by expanding into more profitable semiconductors for mobile devices and servers. Kwon is taking over a business valued at $159 billion that’s also No. 1 in mobile phones and televisions as global competition intensifies.

“The consumer electronics business is still making much more money,” Lee Sun Tae, an analyst at NH Investment & Securities Co. in Seoul, said by phone. “He won’t prioritize one area over another, but consumer electronics will remain a more profitable business, and he’ll take that into account.”

Overtaking Nokia

Samsung ended Nokia Oyj (NOK1V)’s 14-year run as the global leader in mobile phones for the first time last quarter, while regaining the lead in the smartphone market from Apple Inc. (AAPL) The iPhone maker made a new court filing on June 5 to block sales of the latest Galaxy smartphones in the U.S., deepening a global patent dispute.

Lee Jae Yong, the son of Chairman Lee Kun Hee, will remain chief operating officer, according to the statement.

Samsung rose 5.2 percent, the most since Dec. 1, to 1,265,000 won at the close on the Korea stock exchange. The shares have advanced 20 percent this year, compared with a 1.2 percent gain on the benchmark Kospi index.

Separately, Samsung said it plans to build a multibillion dollar semiconductor factory in South Korea.

The company will spend 2.25 trillion won ($1.9 billion) to build the plant to meet rising demand for chips powering mobile devices, Samsung said in a statement today.

The production line will be built in Hwaseong, South Korea, south of Seoul. The company seeks to complete construction by the end of 2013, according to the statement.

Samsung is shifting away from making computer memory to more profitable mobile chips as smartphones and tablet computers cut into demand for bulkier machines.

The company plans to spend 15 trillion won on the semiconductor business this year as it challenges Taiwan Semiconductor Manufacturing Co. (2330) in contract chip manufacturing, building on its exclusive deal to make Apple-designed processors running the iPhone and iPad.

“The size of the investment is very massive,” Choi Do Yeon, a Seoul-based analyst at LIG Investment & Securities, said by phone. “It shows Samsung’s strong will to focus on the non- memory side, rather than the memory side.”

To contact the reporter on this story: Jun Yang in Seoul at jyang180@bloomberg.net

To contact the editor responsible for this story: Michael Tighe at mtighe4@bloomberg.net

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