Samsung picks veteran executive to tackle 'chip crisis' amid AI boom

By Heekyong Yang and Ju-min Park

SEOUL (Reuters) -Samsung Electronics has replaced the chief of its semiconductor division in a bid to overcome a "chip crisis", amid a booming market for AI chips where the world's biggest memory chipmaker has lagged peers.

The South Korean manufacturer on Tuesday said it has appointed Young Hyun Jun effective immediately, shifting him from the role as head of its future business planning unit.

The move is likely aimed at catching up in the market for top-end chips used in artificial intelligence such as high bandwidth memory (HBM) chips, an area where Samsung has fallen behind rivals such as SK Hynix, analysts said.

"This is a preemptive measure to strengthen future competitiveness by renewing the atmosphere internally and externally," Samsung said in a statement.

Samsung's market share in DRAM chips used in tech devices reached 45.5% in the fourth quarter last year, according to data provider TrendForce. It lags, however, in the niche but increasingly important HBM chips segment where SK Hynix controls more than 90% of the mainstream HBM3 market.

HBM3 is a fourth-generation HBM standard currently the most used for AI chipsets like those made by industry leader Nvidia.

Jun, 63, had led Samsung's memory chip business from 2014 to 2017 after working on the development of DRAM and flash memory chips. He was also the CEO of battery arm Samsung SDI from 2017 to 2022, overseeing a U.S. electric vehicle battery joint venture with automaker Stellantis.

"We expect him to overcome the chip crisis with his management know-how he has accumulated," Samsung said.

Kye Hyun Kyung, who had led the semiconductor division since 2022, will swap into Jun's prior role as head of its future business planning unit.

Replacing such a high-ranking position in the middle of the year is unusual given most personnel changes at Samsung typically take place in the beginning of the year, analysts said.

CHIP DIVISION SEEN LAGGING

Samsung was late to respond to rapidly rising demand for memory chips used in AI chipsets, analysts said, with the specialised products being priced significantly higher, albeit making up a smaller portion of the DRAM market by shipments.

"The chip division has been lagging in competitiveness on various fronts, on high-density DRAM, its NAND products are no longer ahead of competition, and in foundry compared to TSMC," said analyst Lee Min-hee at BNK Investment & Securities, referring to Taiwan's TSMC, the world's top contract chipmaker.

"It also missed a lot of the global AI upward trend," Lee added.

At Samsung's annual meeting in March, the former chip division head Kyung had insisted the manufacturer going forward could avoid making similar missteps in the HBM market.

"We're better prepared to prevent that from happening again in the future", said Kyung, when answering a shareholder question on Samsung's recent setbacks in this area.

(Reporting by Heekyong Yang and Ju-min Park; Additional reporting by Joyce Lee; Editing by Ed Davies, Christopher Cushing and Jamie Freed)