Lee Jae-yong re-entry after 1078 days… Samsung “The whole company is devastated”

Samsung Electronics’ Vice Chairman Lee Jae-yong, who was tried in the case of the Gukjeong Nongdan case, was sentenced to two years in prison in the afternoon of the 18th and was arrested in court. Vice-Chairman Lee was arrested only 1078 days after he was released on probation in February 2018. Following the death of Chairman Lee Kun-hee in October of last year, Samsung was shocked when Lee, the central point of the group, was arrested after three months.

From this morning, there was silence throughout the Samsung Electronics office building in Seocho-dong, Seoul. At around 2:20 pm, the atmosphere became heavier when the news that Vice Chairman Lee was arrested came out.

A high-ranking official of Samsung Electronics said, “In a word, I have nothing to say except to say,’It’s terrible.’ In fact, the company expected a probation, so the impact was greater.” Another Samsung Electronics official said, “The executives of most departments are holding emergency meetings until late in the afternoon.”

An employee of a Samsung affiliate, who met in front of the Samsung Electronics office building, said, “When the judgment came, the office was a bit fuzzy. He even made a compliance committee and made all kinds of demands and worked as a’Hope Advisor’… “” and blurred the end.

Vice-Chairman Lee visited the Pyeongtaek semiconductor plant on the 4th, and two days later, the Samsung Research Center emphasized, “Let’s take responsibility as a leading company several hundred times,” and has been on site since the beginning of the year. An executive of Samsung Electronics said, “But the whole company is devastated because of the unexpected results.”

Increasingly, the timing of preoccupying new technologies is more important, and there were concerns that Samsung could miss the opportunity due to the absence of Vice Chairman Lee. Former Samsung Advanced Institute of Technology Son Wook said, “I am worried that Samsung’s innovation will slow down. I can’t guarantee that Samsung will not follow the steps of Sony, which once crashed.”

Samsung Electronics did not come up with a separate position on this day. As in 4 years ago when Vice Chairman Lee was first arrested, it is expected that the future will be operated by specialized managers for each affiliate, rather than the group-level emergency management system. At the time, Samsung dismantled the Future Strategy Office, which served as the group’s control tower, and coordinated the current issues by creating a business support task force (TF) for each of its three affiliates, including electronics, life, and trade.

However, the analysis is that the aftermath of this’no owner’ will be bigger than four years ago. KAIST Professor Lee Byung-tae said, “It is a much more difficult time now than at the time.” “The digital economy has advanced more than 10 years in the aftermath of the novel coronavirus infection (Corona 19), and China’s willingness to’semiconductor independence’ is strong due to the trade conflict between the US and China. At this time, the owner’s restraint, who has to make heavy decisions, can hurt the company.”

Securing new growth engines can also be disrupted. From February 2017, when Vice Chairman Lee was under arrest, to February of the following year, large investments at Samsung Electronics were’all-stop’. It was the last time that Vice Chairman Lee acquired Harman, an American electronic parts company, in November 2016, three months before his arrest. Again, it is said that the plan to invest 133 trillion won in the system semiconductor business, led by Vice Chairman Lee, may creak.

Seoul National University Business School Professor Lee Kyung-mook said, “The arrest of Lee Vice-Chairman will inevitably delay decision-making related to large-scale mergers and acquisitions or investments, which must be decided at the general level,” he said. “It would be welcome in places that compete with Samsung Electronics such as TSMC in Taiwan.” .

Foreign media such as Bloomberg, Nihon Gayizai, and Reuters predicted that Samsung Electronics could face difficulties due to the absence of the total number while struggling with rivals. Bloomberg News predicted that “in a situation where competition is intensifying due to US-China risks and Corona 19, the vacancy of the heads of memory chips, smartphones, and consumer electronics companies will make long-term projects or large-scale investments difficult (Samsung Electronics).” .

The National Federation of Entrepreneurs made a statement on the day and said, “A long-term lack of leadership can delay entry into new businesses and decision-making, resulting in lagging behind in global competition.”

On this day, the share price of Samsung Electronics ended at 85,000 won, down 3.41%. In a day, the market cap evaporated by 18 trillion won. Samsung C&T (6.84%), Samsung Life Insurance (-4.96%), Samsung SDI (-4.21%), and Samsung Engineering (-3.65%), the largest shareholders of Lee, fell at the same time.

Reporters Park Hyung-su, Choi Hyun-ju, and Kwon Yu-jin [email protected]