Management changes are underway at Korea's two biggest consumer electronics companies, with LG's new CEO planning to streamline the business to allow faster decision-making and reduce waste, and Samsung's chairman hinting at plans for its future leadership.
Both companies are facing up to uncertain economic times, with Samsung seeing profits down in the last three months despite record sales, and LG announcing net profits reduced by 99% and a record operating loss.
LG's problems largely stem from its disappointing showing in the smartphone market, into which it's a late arrival. Despite still being the world's third-biggest mobile phone company, it has been slow to get on the smartphone bandwagon, and as a result the company's phone division made a loss for a second successive quarter, clocking up a record 304bn won (almost £170m).
And while LG TV shipments were up 37% on the same period last year, increased competition from the likes of Samsung and Sony affected profitability, leading to an operating loss of 185bn won (£103m). Last year the company showed a profit of 851bn won (£475m) in the same period.
New CEO Koo Bon-jun, the younger brother of LG Group chairman Koo Bon-moo, has already appointed new heads for the TV and mobile phone divisions, and plans a streamlining of the management structure to allow faster division-making, and the loss of any divisions not connected to the company's core businesses.
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Emphasis will also be put on innovation and features to set the company's products apart from the competitions'.
Meanwhile Samsung chairman Lee Kun-hee has suggested that the company will soon promote a new, younger leader to take it forward. The prime candidate is his son, Jay Y Lee, currently Samsung Electronics' Chief Operating Officer.
The move comes as Samsung forecasts a tough end to the year due to falling demand for LCD TV panels, oversupply of DRAM devices thanks to sluggish PC sales, and a strengthening of the Korean currency.
Profits from the company's LCD panel division fell 57% year on year, and the company says that it 'expects oversupply in the memory semiconductor market will lead to reduced pricing, while prices for LCD panels will continue to decline.'
The good news, however, comes from Samsung's mobile phone division: riding on the launch of models such as the Galaxy S, it expects to sell 270m handsets over the course of this year.
However, while demand for DRAMs and LCDsis sluggish, Samsung believes now is the time to invest in porduction capacity for these devices, on the grounds that the current market situation will discourage others from doing so.
It therefore expects its total investment this year to be 20tn won (more than £11bn), helping it capitalise on demand for ever smaller memory devices for mobile phones, and further increase its technological capacity in LCD panel production.