[시론] Samsung’s impairment of driving force and concerns over the Korean economy

Dongwon Kim Former Visiting Professor, Department of Economics, Korea University

The judiciary’s judgment on Samsung Group’s vice chairman Lee Jae-yong in the Gukjeong Nongdan case, which had been held for nearly four years, is virtually over. The court ruled on the governance and ethics of large corporations. Vice-Chairman Lee was in a situation where he had to fill his sentence for the remaining one and a half years.

The problem is then. Law is law, economy is economy. In the case of Apple, the legendary founder, Steve Jobs, is deceased, but is still rising as an innovative company. The situation of the individual manager and the company can be seen as separate. However, Samsung is not Apple, and Korea is not the United States. This is because the corporate ecosystem is very different. Even if Jobs dies, Apple works well, but if the vice-chairman is in custody and asks what the problem is, it is no different from arguing that’Korean companies are like American companies’.

The impact of the corona pandemic is the importance of untact and eco-friendliness. Therefore, the characteristics of the post-corona era can be concentrated through acceleration of digital transformation, convergence, and polarization. In order to take the initiative, a cross-industry between companies and industries of any territory and nationality is being developed, and accordingly, the national competitiveness of each country is changing. In particular, the center of the automobile industry is rapidly moving to electric vehicles, and new technologies of artificial intelligence-5G-neural network semiconductor (NPU) are fused to approach autonomous vehicles. Apple recently asked Hyundai Motors to collaborate on electric vehicle production, while the merger of Fiat Chrysler of the US and the PSA Group of France has resulted in the emergence of the world’s fourth largest automobile company. The Hyundai-Kia Motors group was pushed from fourth to fifth in the world overnight.

In particular, as the demand for semiconductors surged due to the corona pandemic, the global semiconductor industry is in turmoil with large-scale mergers and acquisitions. Last year, when Nvidia, a global graphics processing unit (GPU) manufacturer, acquired ARM, Qualcomm announced that it would acquire the chip’s central processing unit (CPU) company, NuVia. Moreover, it is known that Intel, a general semiconductor manufacturer, will entrust the consignment production to TSMC, the world’s No. 1 manufacturer of order semiconductors.

This gust of industrial change is a competition for the global economy in the era of digital transformation beyond corporate or industrial perceptual fluctuations, and is a kind of economic war that is fought over future jobs and incomes of the people of each country.

The government announced the’System Semiconductor Vision and Strategy’ in 2019 to increase Korea’s global semiconductor market share from 1.6% in 2018 to 10% in 2030 in the fabless market, and from 16% in 2018 to 35% in 2030 for employment. The number of personnel has been proposed to increase from 30,000 to 60,000 in 2018. In line with this plan, Samsung Electronics announced’Semiconductor Vision 2030′ and plans to invest 133 trillion won by 2030. Will the emergency management system be able to properly promote this plan? Even if Samsung Electronics’ investment in the non-memory sector is carried out as planned, it is at the level of 12 trillion won, which is only 40% of TSMC’s 30 trillion won investment. Moreover, Samsung Electronics has not been able to pursue large-scale M&As since the acquisition of Harman in 2016. In an emergency management system without a CEO, it is difficult to predict a large-scale M&A for at least the next two years, and it is inevitable that the risk of a decline in competitiveness increases.

I am not concerned about the personal safety of Vice Chairman Lee or the Samsung Electronics business. In the fierce competition of reorganization of the global industry and economy in the post-corona era, what will happen to the Korean economy, which has been damaged by Samsung Electronics’ driving force. It is not about worrying about the crisis of Samsung Electronics, but about future income and jobs in Korea in the post-corona era. I am curious to see what answers the government has to this problem that many people are concerned about.

Dongwon Kim Former Visiting Professor, Department of Economics, Korea University

※ External handwriting contributions may differ from the editorial direction of this magazine.