SEOUL Samsung Electronics Co(005930.KS), Asia's $163 billion technology powerhouse, is shifting CEO Choi Gee-sung to a new role as head of Samsung Group's corporate strategy as it battles Apple Inc(AAPL.O) for supremacy in smartphones and leads the charge to new chip technology.
Choi, 61, has been with Samsung for more than three decades and has worked in all the group's main business divisions, from semiconductors and display to home appliances and telecoms, before taking over as chief executive in 2010.
Crucially, he is seen as chief mentor to Jay Y. Lee, son of Samsung Electronics' chairman Lee Kun-hee and the group's heir apparent. Jay Y. Lee stays as chief operating officer.
"Choi is the best candidate who can chart Samsung through the global economic crisis and ever-intensifying competition," Samsung said in a statement, citing an unnamed executive. "Under Choi, Samsung plans to pursue innovative changes."
The South Korean group named Kwon Oh-hyun as its new CEO. Currently head of Samsung's components business, which oversees chips and display, Kwon cemented Samsung's position in memory chips, where it has almost 50 percent global market share, and expanded into non-memory, or logic chips, which now account for 40 percent of Samsung's overall semiconductor revenue.
GRAPHIC: Samsung ownership r.reuters.com/xyt47s
GRAPHIC: Samsung earnings: r.reuters.com/sem87s
Under Kwon, Samsung became the sole supplier of the mobile processors that power Apple's iPhone and iPad - rival products to Samsung's own Galaxy and Note. The 59-year-old former engineer, who studied electrical engineering at Seoul National University and Stanford, has also led a restructuring of Samsung's LCD flat-screen business.
Samsung said there would be no operational impact from the reshuffle, with Kwon still overseeing the components business.
The announcement comes on the anniversary, 19 years ago, of Lee Kun-hee's 'new management declaration', when he told Samsung executives at a Frankfurt hotel they should change everything except their wives and children to improve the firm's then sub-standard product quality.
Today, Lee Kun-hee is embroiled in a public feud with members of his family that could speed up the transfer of control to his son.
"Jay Y. Lee is in the final stage of being groomed ... and Choi will help in this process, helping him (Jay Y. Lee) look into the group as a whole, not just the electronics unit," said Chung Sun-sup, head of chaebul.com, an online information provider on South Korea's industrial conglomerates, which wield enormous political and economic clout.
The strategic office that Choi will be heading up is the "control tower" of the Samsung Group SAGR.UL, which presides over some 81 companies involved in everything from ships and smartphones to insurance and chemicals.
"There'll be no major changes in overall strategy as Kwon will continue to oversee the components business, while telecoms and consumer electronics are separately run by other executives," said James Song, analyst at KDB Daewoo Securities.
Samsung, which said earlier this month that sales of its range of Galaxy S smartphones had topped 50 million, has moved quickly to overtake Apple in the fast-growth mobile market and has blown away Nokia (NOK1V.HE) and BlackBerry maker Research In Motion RIM.TO.
LOGIC CHIP INVESTMENT
Samsung earlier on Thursday said it will spend $1.9 billion on a new logic chip line to make processors for mobile devices amid explosive demand for smartphones and tablets. It said the new line will use 300 mm wafers and 20 nanometer and 14 nanometer processing technology.
Demand for system chips used in smartphones and tablets is set to more than double to $59 billion in 2016 from $23 billion last year, according to research firm Gartner.
Ahead of the announcements, shares in Asia's biggest technology firm closed up 5.2 percent in a broad market rally that sent the benchmark KOSPI index up 2.6 percent.
(Additional reporting by Hyunjoo Jin; Writing by Ian Geoghegan; Editing by Muralikumar Anantharaman)