All eyes on Samsung heir's next move on late chairman's death anniv.

Asia's Tech News Daily

All eyes on Samsung heir's next move on late chairman's death anniv.

Samsung Vice Chairman Lee Jae-yong enters the Seoul Central District Court for a hearing on illegal use of surgical anesthetic propofol on Oct. 12. Korea Times photo by Ko Young-kwon

Ongoing legal battles to weigh on Samsung heir

By Kim Bo-eun

Samsung heir Lee Jae-yong is being watched closely over how he will steer the nation’s largest conglomerate on the first anniversary of the death of his father and the business group’s late chairman, Lee Kun-hee.

Lee, who was released from prison in August, is seen to have three key missions ― creating new growth engines through bold investments, overhauling corporate governance and finding a solution to union-management relations.

Although he has remained relatively silent since his release from prison, the de factor head of the tech giant is expected to emerge once again at the forefront of managing the conglomerate and play an even greater role than he did in the past year. The Samsung chief received a prison sentence in January for bribing impeached and jailed President Park Geun-hye, but was released via a special pardon in August.

During Lee’s trial last year over the massive bribery scandal linked to the ousted President Park, he stated plans to honor his late father by surpassing his achievements. “The best way to honor my father is to make Samsung greater and stronger than what the chairman accomplished,” he said at the time.

Shortly after Lee’s release, Samsung unveiled a plan to invest 240 trillion won ($204 billion) over the next three years in non-memory chips, 5G and artificial intelligence.

The tech giant, currently the No. 1 player in the memory chip market, is aiming to gain the same title for non-memory chips, which are needed in cutting-edge technology sectors such as artificial intelligence.

Samsung is also seeking to scale up its foundry, or semiconductor contract manufacturing business, as demand for the service is high and is set to continue to grow. A major investment decision in the U.S. where Samsung seeks to build a second foundry plant is currently pending. Taylor City in Texas is widely expected to be the location, after the local authorities there offered substantial incentives. Lee is expected to visit the U.S. next month to meet with the authorities there for a final decision.

All eyes on Samsung heir's next move on late chairman's death anniv.

Samsung Electronics’ new line at its chip campus in Pyeongtaek / Courtesy of Samsung Electronics

But investors are waiting for Samsung to carry out a major acquisition in a future growth sector to increase its company value. Samsung’s shares have been on a downward trajectory after peaking in January.

The conglomerate has stated it is preparing for a meaningful acquisition that will strengthen its competitiveness ― another top priority for the Samsung heir.

Internally, Samsung needs to deal with the need for restructuring and negotiate with its union to address calls for better compensation.

With dozens of affiliates, it is likely to re-establish a previously-abolished control tower for group-wide strategies and policies. Currently, three key affiliates ― the main electronics unit, life insurer and construction arm C&T ― each operate a task force that partly assumes the role of a control tower.

Samsung also needs to set up a leadership structure according to Lee’s decision not to hand over his management control to his children.

Last year, the conglomerate requested global consulting firm Boston Consulting Group for advice on restructuring and the latter is expected to present options for the conglomerate soon.

Finally, finding common ground with its unionized workers will be a challenge for Samsung, which has a history of oppressing unions. It is now seeking to better protect workers’ interests, after Lee announced in May last year that the conglomerate would abolish its no-tolerance policy for unions.

Samsung’s management and its unions signed their first collective agreement in August, and the company is set to engage in negotiations on calls for pay hikes next month.

But Lee is still embroiled in legal battles, including allegations of irregularities in merging affiliates. This is set to weigh on the Samsung chief in carrying out his role.

“Lee continues to face criticism from civic groups over his role, given he has been released on parole,” an industry official said. “The government stated the release was to enable Lee to help invigorate Korea’s economy amid the COVID-19 pandemic, but assuming this role will prove to be tricky given the current public sentiment.”

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