Samsung flags profit decline as chip market weakens

SEOUL -- Samsung Electronics said Friday it expected operating profit to tumble 56 percent for the second quarter of this year in the face of a weakening chip market.

Operating profit for the April to June period is forecast to reach around 6.5 trillion won ($5.6 billion), down 56 percent from a year earlier, the world's largest maker of smartphones and memory chips said in a statement.

The firm is the flagship subsidiary of the giant Samsung Group, by far the biggest of the family-controlled conglomerates that dominate business in the world's 11th largest economy, and it is crucial to South Korea's economic health.

It has enjoyed record profits in recent years despite a series of setbacks, including the jailing of its de facto chief.

But now the picture is changing, with chip prices falling as global supply increases while demand weakens.

Samsung launched its top-end S10 5G smartphone earlier this year, after South Korea won the global race to commercially launch the world's first nationwide 5G network.

But in April it made a high-profile decision to push back the release of its new Galaxy Fold phones after reviewers provided with early devices reported screen problems within days of use.

While Samsung's device was not the first folding handset, the smartphone giant was expected to help spark demand and potentially revive a sector that has been struggling for new innovations.

The South Korean firm had spent nearly eight years developing the Galaxy Fold as part of its strategy to propel growth with groundbreaking gadgets.

The firm has yet to announce its new release date.

The smartphone giant's reputation had taken a hit after the bribery conviction of Lee Jae-yong -- the son and heir of the group's ailing current chairman Lee Kun-hee.

The junior Lee was a prominent figure in the scandal that ousted former South Korean president Park Geun-hye and was sentenced to five years in jail in August 2017.

He was freed in February last year after several of his convictions were quashed on appeal.

Its French subsidiary, on the other hand, is currently facing charges of deceptive marketing over its corporate ethics pledges after activists complained that the smartphone giant's practices in its factories violated human rights.

source: news.abs-cbn.com

World's biggest startup? Samsung to reform corporate culture

SEOUL - Samsung Electronics Co Ltd, the world's biggest maker of smartphones and memory chips, announced on Thursday that it plans to adopt a corporate culture akin to a startup, seeking to become more nimble as growth slows.

Samsung's executives will sign a pledge to move away from a top-down culture and towards a working environment that fosters open dialogue.

The flagship firm of South Korea's dominant conglomerate will also reduce the number of levels in its staff hierarchy and hold more frequent online discussions between business division heads and employees.

"We aim to reform our internal culture, execute as quickly as a startup company and push towards open communication and continuously innovate," it said in a statement.

The pronouncement is the latest among sweeping changes attempted at a time of crisis by the conglomerate and carries echoes of a 1993 exhortation by Samsung Group patriarch Lee Kun-hee to executives to "change everything but your wife and children".

Hurt by a rapid decline in smartphone profits and the absence of new businesses to drive growth, Samsung has been under pressure to reform its military-style working culture to foster innovation.

Some current and former employees say it will be difficult for a company like Samsung, which has global headcount of more than 300,000, to transform itself. Analysts also say there is the risk of Samsung losing its edge as a fast-execution hardware company by attempting to change its ways.

Lee has been hospitalized since a 2014 heart attack, and the group is in the midst of a transition to control by his son, Jay Y. Lee.

Other moves in recent years to ease a rigid corporate culture include flexible working hours, a loosening of dress code requirements for weekend work and less pressure on employees to attend after-work drinking sessions that have long been a staple of Korean corporate life.

Samsung said it will also cut down on unnecessary internal meetings and simplify reporting procedures in order to improve productivity and offer training to employees to strengthen their "winning spirit".

It will also reduce unnecessary overtime and weekend work and push employees to spend time with their families or take advantage of learning opportunities.

source: www.abs-cbnnews.com