Positive Outlook from Securities Market on Lee Jae-yong's Reinstatement... "Enables Swift Decision-Making"

KB Securities Report

Vice Chairman Lee Jae-yong of Samsung Electronics, who was reinstated through the special pardon on August 15 Liberation Day, is making a statement at the Seoul Central District Court in Seocho-gu, Seoul on the 12th. Photo by Kang Jin-hyung aymsdream@

[Asia Economy Reporter Myunghwan Lee] With Samsung Electronics Vice Chairman Lee Jae-yong reinstated through the August 15 Liberation Day special pardon, the securities industry has given a positive evaluation, saying that faster decision-making will become possible.

On the 13th, KB Securities stated, "With this government's special pardon decision, it is expected to create an opportunity for a return to management in the future," expressing this assessment.

Earlier, the government announced on the 12th that, in celebration of Liberation Day, it would grant special pardons, sentence reductions, and reinstatements as of the 15th of this month to 1,693 individuals, including key business figures such as Vice Chairman Lee, low-income livelihood-related criminal offenders, labor-management personnel, and specially considered prisoners. This is the first special pardon under the new administration. Vice Chairman Lee was sentenced to 2 years and 6 months in prison for the state affairs manipulation case during the Park Geun-hye administration and was paroled last August. Although his sentence expired last month, he was still restricted from employment for five years under the Act on the Aggravated Punishment of Specific Economic Crimes.

After the announcement of the special reinstatement, Vice Chairman Lee expressed, "I sincerely thank you for giving me the opportunity to start anew," and stated, "I will contribute to the economy through continuous investment and youth job creation, and repay the expectations of the people and the government's consideration."

KB Securities pointed out that if Vice Chairman Lee returns to management, rapid decision-making on key strategic matters will become possible. Since the dissolution of the Future Strategy Office in 2017, Samsung Group has been operating task forces (TFs) in three divisions?Samsung Electronics, Samsung Life Insurance, and Samsung C&T?centered on professional managers. However, KB Securities evaluated that it was a reality that there were limitations in making decisions on large-scale M&A and establishing the group's mid- to long-term strategies solely with professional managers from affiliated companies.

KB Securities predicted that if Vice Chairman Lee's reinstatement leads to a return to management, rapid decision-making on large-scale M&A and key strategic matters will be possible through consultations among Vice Chairman Lee, the TFs, and professional managers. Since acquiring audio company Harman in November 2016, Samsung Electronics has not engaged in any significant large-scale M&A.

There is also a view that he will bolster the core business sector of semiconductors. KB Securities expects Vice Chairman Lee to prioritize strengthening semiconductor competitiveness to seek solutions to current issues in the semiconductor division, which accounts for 62% of Samsung Electronics' total operating profit, and to maintain the technological gap. In particular, he is expected to actively participate in seeking solutions to issues such as expanding overseas production bases under the U.S. Semiconductor Support Act and participating in Chip4 (Chip4: Korea, U.S., Japan, Taiwan), a U.S.-led semiconductor supply chain cooperation body.

Kim Dong-won, a researcher at KB Securities, forecasted, "To maintain the semiconductor technological gap, focus will be placed on expanding investments in leading-edge processes for DRAM, NAND, and foundry, as well as strengthening market dominance through increased market share."

Meanwhile, following the decision on Vice Chairman Lee's pardon, investor expectations surged, and on the 12th, Samsung Electronics' stock price closed at 60,200 won, up 0.50% (300 won) from the previous trading day, returning to the 60,000 won level.

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