Samsung Electronic’s Vice Chairman and CEO announces his departure from the company

Despite a brilliant performance in the third quarter, Samsung Electronics, the South Korean conglomerate is facing a vacuum in its top leadership which presents a never before opportunity for new generation leaders.

On Friday, in a shocking revelation, Kwon Oh-hyun, Samsung Electronics Co Ltd’s CEO and Vice Chairman said he plans on stepping down from the company’s management, thus deepening concerns over a leadership vacuum at the helm of the South Korean giant.

The group scion, Jay Y. Lee has been jailed for bribery.

The resignation is a huge surprise since he was expected to play a bigger role following the departures of many key executives in the wake of the bribery scandal and Lee’s arrest in February.

The development comes on the same day, Samsung forecasts its record profits for the third quarter on the back of fantastic sales at its memory chip business, in which Kwon was a key figure.

“The timing is nonsensical. Samsung tipped record earnings, it’s going to be better in the fourth-quarter, and all that’s been driven by Kwon’s components business,” said Park Ju-gun, head of research firm CEO Score.

Kwon, 64, is seen as Samsung’s No. 2. He is not only the group’s chairman but also a board director and the company’s memory chip and display businesses.

Known as “Mr Chip” Kwon said the time had come to “start anew with new spirit and young leadership”.

“We are fortunately making record earnings right now, but this is the fruit of past decisions and investments; we are not able to even get close to finding new growth engines by reading future trends right now”.

The development comes at a time when global chip makers are consolidating their positions faced with a major shift; Japan’s Toshiba Corp is partnering with SK Hynix, a rival. Other firms are also mirroring this move. Chipmakers are set to enter new areas of growth including, artificial intelligence and automobiles.

While Samsung’s record profits made its stock hit their all time high, with news of the Kwon’s departure reaching the market, Samsung’s shares, worth nearly $310 billion, fell by 1.5%.

The Samsung Group is South Korea’s top conglomerate with businesses ranging from hotels to smartphones.

According to sources familiar with the matter at hand, with no second generation leadership, there is no one to take the big decisions following Lee’s arrest.

“I‘m worried about a leadership vacuum at a time when Lee is absent from management,” said Chung Sun-sup, chief executive of research firm, said following Kwon’s announcement.

He went on to add, on the positive side, this could be an opportunity for a new generation to emerge and fill the vacuume in the leadership at Samsung.

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