Samsung Electronics' logo is seen at its headquarters in Seocho District, Seoul, Nov. 17. Newsis

Samsung Electronics announced a major leadership shakeup at its Device Solutions (DS) division, Wednesday, replacing the heads of its memory and foundry businesses.

The leadership reshuffle is widely viewed as Samsung's response to mounting concerns about its position as the world's leading memory chipmaker and also reflects growing pressure for decisive leadership changes to bolster the company's competitiveness in advanced chip manufacturing.

Despite the leadership changes at its chip division, Samsung chose not to replace its three vice chairmen, signaling its intention to maintain stability ahead of a critical court ruling involving Executive Chairman Lee Jae-yong. The ruling, expected in February, pertains to a high-profile 2015 merger case that has drawn significant attention.

Samsung Electronics Vice Chairman Jun Young-hyun speaks during a ceremony marking the installation of new facilities at the company's plant in Yongin, Gyeonggi Province, Nov. 18. Courtesy of Samsung Electronics

In its regular reshuffle of nine president-level executives, Samsung named DS division Vice Chairman Jun Young-hyun as one of the company's co-CEOs and the new head of the memory business. The change replaces Lee Jung-bae, the outgoing head of the memory division, and places the business directly under the leadership of a CEO.

Samsung appointed Device Solutions America Executive Vice President Han Jin-man as the new head of the foundry business, replacing Choi Si-young. The company also created a new president-level position, titled chief technology officer of the foundry business, which has been given to Nam Seok-woo. Nam, who was previously responsible for manufacturing and infrastructure in the DS division, will now focus on driving the technological strategy of the foundry business.

The reshuffle is viewed as Samsung's effort to strengthen the execution capabilities of its memory chip division and to address employee morale in its struggling foundry business through strategic changes.

Jun, a memory chip specialist who led the semiconductor division from 2014 to 2017, returned to Samsung Electronics in May as the head of the DS division, to take on the tasks of improving Samsung's competitiveness in the high-bandwidth memory (HBM) business and normalizing operations at the foundry business.

HBM has become one of the most important sectors in the semiconductor industry, particularly due to its use in artificial intelligence (AI) processors. However, Samsung is trailing behind its competitor, SK hynix, which currently leads the market as the primary supplier to Nvidia.

Given this context, placing the memory business under Jun's direct control signals that Samsung is placing greater emphasis on its HBM business.

"The appointment of Jun Young-hyun as the head of memory business means that he will be managing the HBM business directly," said Lee Jong-hwan, a professor at Sangmyung University's Department of System Semiconductor Engineering and a former Samsung Electronics researcher.

"This demonstrates the company's intention to avoid past mistakes, such as sidelining the HBM business, and to enhance its competitiveness with strong leadership. It also suggests that Jun will personally oversee efforts to resolve challenges related to supplying Samsung's HBM chips to major tech companies, including Nvidia."

Seen above is NVIDIA CEO Jensen Huang's signature on Samsung Electronics' HBM3E 12H chip at a Samsung Electronics booth at the GTC 2024 in San Jose, Calif. This photo was posted on the social media account of Han Jin-man, then-executive vice president of Samsung Electronics Device Solutions America. Captured from Han's social media

Samsung Electronics' foundry business head Han Jin-man / Courtesy of Samsung Electronics

The appointment of Han as the new head of Samsung's foundry business aligns with this strategy.

Before taking charge of Samsung's chip business in the United States in 2022, Han worked in the company's design teams for DRAM and flash memory and also held marketing roles. In March, Han garnered attention by securing Nvidia CEO Jensen Huang's "Jensen approved" endorsement for Samsung's 12-layer HBM3e chip.

Samsung said Han's appointment was made with the expectation that he will "strengthen networks with key clients and enhance competitiveness by leveraging his combination of technical expertise, business acumen and extensive experience in global customer engagement."

While bringing changes to its DS division, Samsung pursued stability in its top leadership, with the company's three vice chairmen retaining their positions.

Samsung's Device Experience (DX) division head and co-CEO Han Jong-hee will expand his responsibilities by taking on the role of chair for the newly established Product Quality Innovation Committee. The DX division is in charge of smartphones and other electronic appliances.

Vice Chairman Chung Hyun-ho, who leads the company's business support task force and is widely regarded as the right-hand man of Lee, the executive chairman, retained his position due to his critical role as Samsung's top strategist.

System LSI business head Park Yong-in, responsible for designing mobile application processors and other chips, along with mobile experience business head Roh Tae-moon, who leads the Galaxy smartphone series, both retained their positions.

Samsung Electronics Executive Chairman Lee Jae-yong closes his eyes, while attending a Seoul High Court hearing in Seocho District, Seoul, Monday. Yonhap

Market watchers speculate that Wednesday's reshuffle may be part of Samsung's efforts to ensure stability ahead of the Seoul High Court's upcoming ruling on an appeals trial regarding the executive chairman's alleged involvement in the controversial 2015 merger of two Samsung Group affiliates.

The primary purpose of the merger was to streamline Samsung's corporate structure and strengthen the control of the Lee family, particularly in preparation for the succession of Lee Jae-yong. The merger was controversial due to allegations of stock price manipulation, undervaluation of assets and potential harm to minority shareholders.

During the final hearing of the trial on Monday, Lee pleaded his innocence, acknowledging that he is aware of the "concerns surrounding Samsung's future" and stating that the company is now facing "a reality more challenging than ever before."

Lee was cleared of all 19 charges in a lower court trial in February, as the Seoul Central District Court ruled that tightening Lee's control over Samsung Group was not the sole purpose of the merger, and there was no evidence that the merger caused financial harm to shareholders. However, the prosecution appealed the decision, seeking a five-year prison sentence. They argued that the group had manipulated the stock market to facilitate the merger.

With the court set to deliver its ruling on Feb. 3, Samsung appears to have opted against making sweeping changes involving its executives, apparently to avoid amplifying uncertainties during this critical period.

"While Samsung need to change, it is also true that the company also needs stability given Lee's trial," the professor said.

"What's more important are the shakeups at the company's vice-president level, which are expected to follow soon. Samsung's current crisis is rooted in missteps in its leadership strategy, and to resolve this, the company needs executives who possess a deep understanding of technology."