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Samsung CEOs hold rare meeting amid recession woes next year

Latest meeting marks first of its kind since dissolution of group's control tower in 2017

By Jie Ye-eun

Published : Dec. 28, 2022 - 16:00

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Samsung Electronics' headquarters in Gangnam, southern Seoul (Yonhap) Samsung Electronics' headquarters in Gangnam, southern Seoul (Yonhap)

South Korea’s largest conglomerate Samsung Group recently held a rare gathering of CEOs of all affiliates in an apparent move to ramp up preparedness for a global economic downturn next year coupled with falling chip prices, unfavorable currency rates and further rate hikes, according to industry sources on Wednesday.

The high-level meeting was convened at the Samsung Electronics Leadership Center in Yongin, Gyeonggi Province on Monday, according to industry sources who wished to remain anonymous as well as in local media reports. Samsung Electronics Chairman Lee Jae-yong, the de facto leader of the group, did not attend the meeting, the sources added.

During the meeting, top executives exchanged this year’s business performance and next year’s business strategies, as well as ways to tackle macroeconomic challenges ahead, the sources said.

It was the first time in six years for the groupwide leadership meeting to be held at Samsung since a weekly meeting of top executives across affiliates was suspended following the dissolution of the Future Strategy Office, the group’s control tower, in 2017.

Samsung companies have held several emergency meetings this year. At the end of June, 25 CEOs of key tech companies including Samsung Electronics, Samsung Display and Samsung SDI gathered to address growth uncertainties in the global markets.

Sources said Monday’s meeting comes as Samsung was bracing for a gloomy outlook for next year. In particular, its crown jewel Samsung Electronics is highly likely to see losses in the fourth quarter amid a grim outlook of the semiconductor market next year.

Samsung’s regulatory filings showed that its operating profit for the July-September period tumbled 31.4 percent on-year. Backed by pent-up global demand for the information technology sector, the firm’s inventory assets in the third quarter jumped 38.5 percent compared to the end of last year.

FnGuide, a market intelligence firm, projected the chipmaker’s fourth-quarter operating profit to record 7.34 trillion won ($5.79 billion), falling about 47 percent on-year. The market tracker further predicted Samsung’s operating profit for the January-March period to plunge 57 percent on-year.

Major brokerage houses have sharply lowered their fourth-quarter earnings outlook for the chipmaker amid sluggish demand for memory chips, smartphones and home appliances. They estimated the firm’s sales and operating profit for the following quarter to be around 67 trillion won and 6 trillion won, respectively.

"Despite a series of special events such as Black Friday and the World Cup, Samsung's consumer electronics and visual display sectors cannot see a recovery in demand. Its mobile business sales are expected to hit the lowest level of this year," Eugene Investment Securities analyst Lee Seung-woo said.

The analyst forecast the chipmaker's sales and operating profit to dip 8 percent on-year and 44 percent on-year, respectively, to 281 trillion won and 25.2 trillion won next year.