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The global economy is fluctuating… ‘Total number blank’ until next July
Vice-Chairman Lee and special prosecutors announced on the 25th that they will not reapply on the ruling on the ruling of the ruling of the’Gukjeong Nongdan’, which was sentenced on the 18th. As the sentence of two years and six months was confirmed, Vice-Chairman Lee was imprisoned for one year and six months after subtracting about one year from the arrest period following the previous first trial sentence.
Samsung Electronics started to enter the “emergency management system” in earnest as Vice Chairman Lee is faced with a “general gap” until July of next year unless he is pardoned or parole. Since the dissolution of the group in 2017, each subsidiary has been conducting autonomous management, but large-scale investments and mergers and acquisitions (M&As) are expected to require Lee Vice Chairman.
However, there are many voices concerned about business disruption caused by’indoor management’. This is because there is a limit to operating through interviews during imprisonment, and more restrictions are expected, such as the possibility of interviewing at all due to the Corona 19 situation.
Amid the global economy fluctuating in the aftermath of Corona 19, there are concerns that Samsung Electronics is falling behind in the global competition such as the semiconductor business. This is because the situation at home and abroad is urgently changing, as the’Competition for Foundry (Semiconductor Consignment) Hegemony’ with Taiwan’s TSMC is intensifying and the impact of the US-China trade dispute has to be considered.
First, TSMC, the No. 1 foundry industry, predicted a large-scale investment of over 30 trillion won in facilities this year. As TSMC took an aggressive move, the fire fell on the foot of Samsung Electronics. Previously, Samsung Electronics decided to invest KRW 133 trillion with the goal of becoming the number one system semiconductor (non-memory semiconductor) by 2030, and is expanding the foundry business as well. However, unlike TSMC, which focuses only on foundries, it is expected to be difficult as it has to expand to non-memory businesses such as foundries and system semiconductors along with Suseong, which is the number one memory semiconductor.
‘Outdoor management’ is also impossible?… Controversy over employment restrictions
The pouring outlook on Samsung Electronics’ plant expansion also shows that it is time for Samsung Electronics to make an investment decision. Bloomberg News said on the 21st (local time), “Samsung Electronics is considering a plan to build a semiconductor factory in Texas, US by investing more than 10 billion dollars (about 11 trillion won).” “We are discussing to establish a factory in Austin that can manufacture products.” The Wall Street Journal also reported on the 22nd (local time) that “Samsung Electronics is considering investing $17 billion to build a semiconductor plant in Arizona, Texas or New York.”
In particular, as the Biden government is expected to provide incentives by emphasizing “production in its own country (US),” following Trump, analysts say that expansion of local factories is inevitable in order to win foundry orders from US semiconductor companies such as Intel. A business official said, “TSMC invests 12 billion dollars in Arizona to establish a local foundry plant, which intensifies competition,” said a business official. “Samsung also needs large-scale investments such as plant expansion in order not to fall behind the competition.”
The issue of’employment restrictions’ following the sentence of imprisonment is also expected to be controversial. According to the current regulations on employment restrictions in the Act on Aggravated Punishment for Specific Economic Crimes (Special Privileges Act), Vice-Chairman Lee is not allowed to work at Samsung Electronics for five years not only during the execution period but also after the execution is terminated.
The Civil Organization’s Economic Reform Solidarity argues that the Ministry of Justice should immediately request the chairman of Samsung Electronics’ board of directors to dismiss Lee from the chairman of the board of directors of Samsung Electronics, and that the Ministry of Justice should demand the dismissal of Lee as soon as the decision is confirmed.
There is also a prospect that even the’indoor management’, which was possible, will become difficult if it leads to actual employment restrictions. However, some observers say that as Vice-Chairman Lee left a registered director at Samsung Electronics and worked without pay, the employment restrictions will not apply. An official from the legal profession said, “Depending on how the special rate law is interpreted, the application of this vice-chairman may be different,” he said. “Currently, in order not to be subject to the employment restriction, it seems that it will have to be reinstated or approved by the government.”