Another Shakeup at Samsung

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Nevertheless, many analysts don't see the new CEO, who turns 62 in June, as a leader guiding the company to the next stage of growth. "Samsung is in for a longer-term leadership change," figures Kim Sun Woon, head of the Center for Good Corporate Governance, an independent group pursuing better governance of Korean companies. "Lee Yoon Woo could be a seat warmer for Chairman Lee's son, but my personal hope is that he will help lay some groundwork for a more sustainable management system to make the company independent from other group companies."

Chairman Lee's son, Lee Jae Yong, 39, who earned an MBA at Japan's Keio University and studied at Harvard Business School, has been groomed as Samsung Electronics' future chief. But after investigators accused the chairman last month of evading taxes as part of a scheme to transfer management control to his son, senior company officials said the son would step down as its chief customer officer and stay overseas to gain more experience. "If the son can prove himself in one way or another he will probably return home to take over as the leader. Otherwise he might have to remain as just a major shareholder," Kim says.

The Weaker Won is a Plus

Shareholder activists have criticized the 66-year-old chairman and his relatives for what they call the Lee family's near-absolute control of Samsung Group's 59 affiliates, ranging from insurance and brokerage services to shipbuilding and chip-making, even though the Lees only have a sliver of shares of the group. The family managed to retain the tight grip because reforms in the past decade have tackled accounting and finances in listed companies but have done little to limit the founding family's control via tangled cross-shareholdings of affiliates, some of them held privately.

In the short term, however, Samsung's outlook remains solid thanks to its strength in TV, LCD screens, and handsets. The company is also getting a boost from a weaker Korean currency and robust demand. Its long-suffering chip division is also expected to turn the corner by the second half after suffering during an industry-wide downturn, according to Kim Soo Kyoum, semiconductor program director at researcher IDC. "The current difficulties of the memory-chip industry are widening the gap between cash-rich leader Samsung and its competitors and Samsung is bound to benefit hugely when the industry begins to recover," he says.

Investors seem to share such optimism. Samsung Electronics' stock price, which ended 0.4% higher, at $707.9 on May 14, has gained 33% so far this year. CJ Investment & Securities forecasts the company's operating profits will rise 94%, to $11 billion, this year on sales of $76.1 billion, up 25% from last year.

Moon is BusinessWeek's Seoul bureau chief.