Samsung Undergoes Major RevampSamsung Undergoes Major Revamp

In order to combat a slowing economy, Samsung will reorganize into two major divisions.

The electronics company had previously operated separate divisions for chips, liquid crystal displays, cell phones, and consumer electronics. It will consolidate its businesses into a Digital Media and Communications division that focuses on consumer products such as cell phones and televisions, and a Device Solution division that handles displays and memory chips.

The move comes as the company faces a slumping economy that's leading to decreased demand and prices for semiconductors and flat screens. Samsung's chips division has been dragging down the company, and for the third quarter of 2008 the company saw its net profits decline 44% from the year before.

The cell phone and digital media divisions have been gaining traction though, and both offer high profit margins for the company. The company is now the second-largest cell phone manufacturer behind Nokia, and its consumer electronics products are rapidly gaining market share from the likes of Sony.

The company will announce its fourth-quarter earnings Jan. 23, and most analysts expect the chip division to post a significant loss. This loss may be overcome by profits in other divisions, but the company is expected to post its worst quarterly earnings in at least eight years.

The restructuring is also leading to a shakeup in management. Current CEO Lee Yoon-woo will helm the struggling Device Solution division, and Choi Gee-sung will be elevated to head the consumer electronics division. Hwang Chang-kyu, the head of the semiconductor unit, and vice chairman Lee Ki-tae, who ran the mobile phone business before Choi, will leave the company. Additionally, top executives will be taking a 20% pay cut and employees will have some benefits trimmed.

"A new wave of young talent was chosen to overcome the global downturn," Samsung said in a statement.