Samsung Electronics announced a leadership reshuffle on November 27, 2024, aimed at enhancing its competitiveness in the critical microchip production sector, particularly for artificial intelligence servers.

Despite a significant 277% increase in operating profits to $6.6 billion year-on-year in the third quarter of 2024, Samsung's performance fell short of market expectations, contributing to a 27% decline in its share price throughout the year.

The company has faced challenges while competitors like Nvidia and Dell reported substantial revenue growth, with Nvidia achieving a remarkable 94% year-on-year increase.

In the memory sector, Samsung is currently lagging behind SK hynix in HBM3E memory market share and validation by Nvidia, despite being able to ship high volumes once products are qualified.

This restructuring comes amid potential operational challenges posed by protectionist trade policies and increasing competition from Chinese chipmakers.

The management shake-up includes the appointment of a new chief technology officer for the foundry, with a focus on exploring new development opportunities, although experts question the effectiveness of these changes.

Chairman Jay Y. Lee has expressed serious concerns about Samsung's future, emphasizing the need for significant changes to improve competitiveness amid slowing profit growth.

Lee faces ongoing legal challenges, including accusations of stock price manipulation and accounting fraud related to a controversial merger, with a verdict on his appeal expected in February 2025.

Samsung is struggling to keep pace with Taiwanese competitor TSMC in producing advanced chips and may consider outsourcing some production to TSMC to secure contracts with major clients like Nvidia.

Vice-chairman Jun Young-hyun has been appointed to lead Samsung's memory business, while Han Jin-man will oversee the foundry division, reflecting a strategic shift in leadership.

Following disappointing financial results and delays in product certification from Nvidia, Jeon Young-hyun, head of Samsung's semiconductor division, has apologized for the shortcomings and committed to making improvements.

Investor response to the leadership changes has been negative, with shares falling by 3.4% following the announcement, reflecting concerns about Samsung's competitive position against rivals.