Samsung Electronics on track for record Q3; CEO Kwon Oh-hyun to step down

CEO and Vice-Chairman Kwon Oh-hyun's surprise resignation comes even as he was expected to take a bigger role

Tech giant Samsung Electronics Co Ltd estimated on Friday its third-quarter operating profit nearly tripled from a year earlier, beating expectations as strong memory chip prices likely padded margins.

However, even as the Korean giant forecast the record profits, it said its CEO and Vice-Chairman Kwon Oh-hyun had decided to step down from management.   

Samsung said its July-September profit was likely 14.5 trillion won ($12.81 billion), compared with an average forecast of 14.3 trillion won from a Thomson Reuters survey of 20 analysts.

Revenue likely rose 29.7 per cent from a year earlier to 62 trillion won, Samsung said in a regulatory filing.

The South Korean company did not elaborate on its performance and will disclose detailed earnings in late October.

Surprise resignation

Kwon's surprise resignation comes even as he was expected to take a bigger role following the arrest of Samsung Group scion and heir apparent Jay Y Lee in February on bribery charges, and the departures of other key executives.

"I believe the time has come for the company to start anew with new spirit and young leadership to better respond to challenges," Kwon, who is seen as Samsung Group No 2, said in a statement.

"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."

Chung Sun-sup, chief executive of research firm Chaebul.com, said he was "surprised and curious about why he is quitting despite record profits".

"I'm also worried about a leadership vacuum at a time when Lee is absent from management," he said.

Known as "Mr Chip", Kwon, 64, oversaw the growth of Samsung's component business which now generates much of the firm's profits, dwarfing earnings from smartphones and other mobile devices.

He cemented Samsung Electronics' position in memory chips and expanded the contract chip manufacturing business.

Kwon was not stepping down immediately, and would serve out his term as Samsung Electronics' chairman of the board until March 2018, the company said.