[Independence Day Pardon] Lee Jae-yong Freed from Judicial Shackles... Begins Leading Efforts to Overcome Crisis

Vice Chairman Lee Jae-yong Restored After Sentence Completion
Enabled to Resume Normal Business Activities

Lee Jae-yong, Vice Chairman of Samsung Electronics, who was referred to prosecution on charges including accounting fraud and unfair merger, is attending the continuation of the first trial held at the Seoul Central District Court in Seocho-gu, Seoul on the 12th. Photo by Kang Jin-hyung aymsdream@

[Asia Economy Reporter Park Sun-mi] Samsung Electronics Vice Chairman Lee Jae-yong has completely escaped judicial risks through the special pardon on August 15 Liberation Day. In a situation where economic uncertainty is higher than ever, it is interpreted as the new government's will for Vice Chairman Lee to play a leading role in overcoming the crisis. Especially amid the intensifying semiconductor hegemony war, the burden and weight of Vice Chairman Lee's leadership to revitalize the Korean economy by achieving ▲semiconductor superpower status ▲securing future industry gap technologies ▲realizing large-scale investment and job creation, as advocated by the Yoon Seok-yeol administration, are expected to be considerable.

◆Severe economic situation... JY needs bold leadership now= On the 12th, the government announced the reinstatement of Samsung Electronics Vice Chairman Lee Jae-yong, who recently completed his sentence, in celebration of Liberation Day. According to the Ministry of Justice and the business community, Vice Chairman Lee was sentenced to 2 years and 6 months in prison in January last year for the state affairs manipulation case and was released on parole last August Liberation Day. Including the period he was detained at Seoul Detention Center during the early investigation, he had already completed his sentence by the end of last month but was unable to engage in normal management activities due to restrictions under the Act on the Aggravated Punishment of Specific Economic Crimes, which barred employment for five years. Since his sentence has already ended, this special pardon is significant in that Vice Chairman Lee is now free from the employment restriction regulation that was to be applied until 2027, allowing him to conduct normal management activities.

With judicial risks resolved, Vice Chairman Lee is expected to immediately return to management and strive to transform Samsung, surrounded by global economic uncertainty, with bold decisions. After Lee's European trip in June, Samsung convened a meeting of presidents and a global strategy council to prepare for global risks. In effect, it has entered an emergency management system.

Until the first half of the year, Samsung Electronics led its best performance driven by strong results in the semiconductor sector, but in the second half, it faces a challenging management environment due to global high inflation, high interest rates, and geopolitical uncertainties. Accordingly, it is anticipated that prioritizing large-scale mergers and acquisitions (M&A) will be a key focus.

In July 2020, Samsung Electronics declared it would achieve a meaningful scale of M&A within three years, but bold decisions were difficult due to Vice Chairman Lee's absence from management participation. With M&A possibilities being discussed across semiconductors, home appliances/mobile, artificial intelligence (AI), robotics, and 5G, the likelihood that Vice Chairman Lee will make the final decision on the M&A initiatives under review is gaining weight.

With Korea's participation in the ‘Chip 4 Alliance’ effectively formalized and U.S. President Joe Biden signing the ‘Chips and Science Act’ to support the semiconductor industry with a total of $280 billion (?365.68 trillion), Samsung Electronics is expected to focus on maximizing efficiency by weighing the pros and cons of strengthening semiconductor cooperation with the U.S. under Vice Chairman Lee's leadership.

◆Active global site visits and investment moves= The previously loosened global network is also expected to be tightened again.

Microsoft (MS) founder Bill Gates, who will visit Korea from the 15th to 17th, is pushing for meetings with major Korean business leaders, raising the possibility of a meeting with Vice Chairman Lee. The Japan trip, which had been postponed due to difficulties in visa issuance during parole, may also resume. Vice Chairman Lee has visited major Japanese clients every spring and exchanged with leading parts and materials companies to stabilize the supply chain, but recently, due to judicial risks, visa issuance was difficult, and visits to Japan were delayed.

As the semiconductor technology alliance has emerged as a key issue between Korea and the U.S., there is a high possibility that Vice Chairman Lee will visit the U.S. next month to discuss cooperation. Samsung Electronics is investing $17 billion to establish a second foundry (semiconductor contract manufacturing) plant in Taylor, Texas, but the groundbreaking ceremony has not yet taken place. Accordingly, after the UN General Assembly in New York in September, it is suggested that President Yoon Seok-yeol and President Joe Biden may hold a Korea-U.S. summit in the U.S., and Vice Chairman Lee might attend the groundbreaking ceremony of the Taylor foundry plant together.

Vice Chairman Lee's role is also expected to grow as a private committee member for attracting the 2030 Busan World Expo. With the management of all Samsung Electronics affiliates rolling up their sleeves to support the Busan Expo bid, there is great expectation that Vice Chairman Lee's powerful global network will contribute significantly to the Expo attraction.

Changes in Samsung's internal titles are also anticipated. The market expects Vice Chairman Lee to be appointed as a registered director and inaugurated as chairman at the shareholders' meeting in March next year. Since his promotion to vice chairman in 2012, he has maintained the vice chairman title for ten years. A business community official said, "Since Vice Chairman Lee has been restricted from participating in management, it is highly likely that he will embark on full-scale crisis escape management with this Liberation Day special pardon. There are many significant decisions that have been postponed and many tasks to be done."

Meanwhile, Lotte Group Chairman Shin Dong-bin was also included among the pardon recipients on the same day. Chairman Shin is expected to focus on investments to overcome the economic crisis by consolidating the group's capabilities. Through the implementation of a ?37 trillion domestic investment plan announced in May for the next five years, efforts to revitalize the industrial ecosystem are also expected. Support activities for attracting the 2030 Busan World Expo, centered on Chairman Shin, are also anticipated to gain further momentum.

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