The Return of Lee Jae-yong: Prioritizing Samsung's Core Businesses in Semiconductors and Batteries

Samsung Electronics Vice Chairman Lee Jae-yong, who was released on parole after 207 days of re-imprisonment, is leaving Seoul Detention Center in Uiwang, Gyeonggi Province on the 13th. Photo by Kang Jin-hyung, Uiwang aymsdream@

The management clock of Samsung Group has started ticking again. Although the meeting schedule between Vice Chairman Lee Jae-yong of Samsung Electronics and key executives has not yet been finalized, it is known that preparations for business reports by major divisions have begun. Vice Chairman Lee, who was released on the 13th, is expected to return to the forefront of management by personally overseeing investments in Samsung's core businesses such as semiconductors and batteries. As the global semiconductor supremacy competition intensifies, Samsung Electronics is expected to reinforce its leading position and boost its growth engine by deciding on large-scale investments and mergers and acquisitions (M&A) to strengthen its semiconductor and battery competitiveness.

Focus on US Investment Regions Amid Semiconductor War

The first issue Vice Chairman Lee is expected to focus on is the construction and expansion of Samsung Electronics' semiconductor factories in the United States. Since Samsung Electronics aims to become the number one system semiconductor company by 2030, building additional local production lines in the US is a matter that requires the top executive's decision from a mid- to long-term perspective. Samsung Electronics is currently negotiating with local governments in Texas, Arizona, New York, and others over tax benefits and incentives. Following the US-Korea summit in May, Samsung Electronics announced an investment to build factories worth $17 billion (approximately 19 trillion KRW) in the US, but the site has not yet been finalized. With Vice Chairman Lee's return, the decision-making process is expected to accelerate, making a conclusion highly likely.

Some speculate that investment in the third factory (P3) being established at the Pyeongtaek campus may be announced. Samsung Electronics has declared it will invest 171 trillion KRW in system semiconductors by 2030, with domestic investments centered around Pyeongtaek. Before his detention in January, Vice Chairman Lee visited the Pyeongtaek 2nd factory's extreme ultraviolet (EUV) lithography production line, the world's largest semiconductor line, as his first on-site management activity of the new year, emphasizing the cultivation of the semiconductor industry ecosystem. This has drawn market attention to whether additional investments to reinforce domestic semiconductor production lines will be made to secure future growth engines.

"Samsung's US Battery Factory Decision by Next Month"

Samsung SDI's new battery factory in the US is also expected to be finalized by next month. According to local media, Samsung SDI has selected Bloomington-Normal, about a two-hour drive from Chicago, Illinois, as one of the main candidate sites for the new factory and is discussing with local governments. Chris Koos, mayor of Normal, stated that Samsung plans to decide on the battery factory site by next month. Discussions reportedly included tax reductions and infrastructure development.

Illinois Senator Dick Durbin told local reporters, "We are competing to attract Samsung's battery factory," adding, "During discussions with the Samsung negotiation team visiting the US this week, I expressed hope that the new battery factory would be near Rivian." Rivian is an electric pickup truck startup that has gained fame through large investments from Amazon and Ford. It receives battery cells from Samsung SDI and has a battery pack factory in Normal. Electric vehicles use modules made by assembling battery cells, and packs made by assembling modules. Samsung SDI's factory in Michigan is also a battery pack factory that assembles battery cells imported from Korea, China, and other countries.

The company acknowledged discussions with Normal city but did not disclose specific decision timelines or other candidate locations. Samsung SDI stated, "We are reviewing the establishment of electric vehicle battery production lines in the US and are holding meetings to select an appropriate location."

Samsung SDI had been considering entering the US market even before officially announcing its US expansion. The US government has pressured companies to establish local factories by excluding incentives for batteries not produced domestically. LG Energy Solution and Panasonic have already established battery production facilities in the US by partnering with General Motors (GM) and Tesla, and even latecomer SK Innovation has made large-scale investments in the US. Consequently, Samsung SDI has faced ongoing criticism for its delayed decision to enter the US market.

Will There Be Large-Scale M&A After Harman?

Expectations are rising for large-scale M&A that could revitalize Samsung Electronics following Vice Chairman Lee's parole. Samsung Electronics has recently shown signs of instability even in its traditionally strong memory semiconductor and smartphone sectors. In the memory semiconductor sector, US-based Micron and SK Hynix have surpassed Samsung Electronics in developing and producing 176-layer NAND and DDR5 DRAM technologies, raising concerns about Samsung's leading position. The smartphone market is also under strong pressure from China's Xiaomi. In this context, voices calling for large-scale M&A to secure growth engines from a mid- to long-term perspective have increased, as no major M&A has occurred since the acquisition of US automotive electronics company Harman in November 2016. Samsung Electronics announced in a conference call on the 29th of last month that it plans to conduct meaningful M&A within three years and is considering various fields such as artificial intelligence (AI), 5G, and automotive electronics.

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