With Lee Jae-yong's Detention, 'New Samsung' Clock Hits Zero... Growing Concerns Over Semiconductor Investment

Competitors Surge Ahead Amid Concerns Over Large-Scale Semiconductor Investment Setbacks

Samsung Electronics Vice Chairman Lee Jae-yong is attending the retrial sentencing hearing of the state affairs manipulation case held at the Seoul High Court in Seocho-gu, Seoul on the 18th. Photo by Hyunmin Kim kimhyun81@

[Asia Economy Reporter Changhwan Lee] Concerns are rising that Samsung Electronics' management uncertainty will increase as Vice Chairman Lee Jae-yong was sentenced to prison and detained on the 18th in the retrial of the 'National Pension Service Scandal' case. It is expected that investments in future growth engines, including semiconductors, which Lee had planned for the 'New Samsung,' could be significantly hindered.

On the day, the Seoul High Court Criminal Division 1 (Presiding Judges Jeong Jun-young, Song Young-seung, Kang Sang-wook) sentenced Vice Chairman Lee, who was indicted on charges including bribery, to 2 years and 6 months in prison. Lee, who had been on trial without detention, was detained in court after an arrest warrant was issued.

With Lee's detention, Samsung has entered a professional management system. Samsung was also operated without an owner for about a year when Lee was detained in 2017.

Although Samsung achieved excellent performance under the professional management system, evaluations suggest that major decisions such as large-scale investments faced setbacks. In fact, since acquiring the American automotive electronics company Harman three months before Lee's previous detention, Samsung has seen a lack of significant mergers and acquisitions (M&A) to date.

There were no large-scale investment announcements until 2019, after Lee returned to management and announced an investment of 133 trillion won to make the system semiconductor business the world's number one.

The business community expects that investment uncertainty will increase with Lee's re-detention. There are particular concerns that the system semiconductor business, which requires large-scale investment, may face difficulties.

Among system semiconductors, foundry is the business Samsung Electronics is currently focusing on growing. Samsung Electronics is the world's second-largest foundry company after Taiwan's TSMC. However, the market share gap with TSMC, the number one, is large, so rapid business growth through large-scale investment is necessary.

TSMC recently announced this year's facility investment plan, the largest ever at about 30 trillion won, to fend off Samsung's pursuit and solidify its number one position. Samsung Electronics also needs comparable investment, and Lee's detention has increased uncertainty regarding future investment timing.

Not only semiconductors but also investments in future growth engines such as AI (artificial intelligence), 5G networks, and bio, which Lee had planned for the 'New Samsung,' are at significant risk of losing momentum.

A business community official said, "Samsung's professional management system is well established, so although Lee was detained, there will not be much disruption," but added, "Decisions that require looking far into the future, such as large-scale investments and mergers and acquisitions, need the owner's role, so setbacks are inevitable in this regard."

This content was produced with the assistance of AI translation services.