Samsung CEO to resign despite record Q3 earnings

South Korean smartphone maker, Samsung Electronics Co Ltd announced Friday of the impending resignation of its CEO and Vice Chairman Kwon Oh-hyun, which has further deepened concerns over a leadership void at the tech giant after group former Chairman, Jay Y. Lee was jailed for bribery.

Oh-hyun was supposed to step up following the arrest of Lee in February before his abrupt resignation. The move came on Fridayas the smartphone maker forecast recorded Q3 operating profit because of the memory chip business, which Kwon was instrumental in building the company into the world leader.

The world’s biggest maker of memory chips, smartphones and TVs is set to shatter its annual profit record this year, thanks partly to soaring demand for memory chips. Semiconductors were Samsung’s top earner in the three months through June, making a whopping $7.20 billion.

“The timing is nonsensical. Samsung tipped record earnings, it’s going to be better in the fourth-quarter, and all that’s been driven by Kwon’s components business,” said Park Ju-gun, head of research firm CEO Score.

Experts equally noted that the company was making record earnings right now, but this is the fruit of past decisions and investments and that the firms are not able to even get close to finding new growth engines by reading future trends right now.

Shares in Samsung which is worth about $310 billion, fell 1.5 percent on Friday after hitting an all-time high earlier today. The departure of 32-year Samsung veteran Kwon after five years in the top job comes at a time of leadership uncertainty at the company.

Kwon would serve out his term as chairman of the board and board director until March 2018, the company said. He is also not stepping down immediately from his two other roles.

The global chip industry is undergoing a major shift with Japan’s Toshiba

Corp partnering with home rival SK Hynix, just as other firms consolidate in search of new growth areas like artificial intelligence and automobiles.

Samsung Group still remains South Korea’s top conglomerate with businesses ranging from smartphones to hotels, it may have no new plans for taking big decisions following Lee’s arrest, experts have said.

Chung Sun-sup, chief executive of research firm Chaebul.com, added that concern about lack of leadership at a time when Lee is absent from management is evident, adding that the leadership changes also could be an opportunity for a new generation to emerge.