A decade after Lee Jae-yong took the helm at Samsung, the tech big’s third-generation company inheritor is present process probably the most extreme check but of his enterprise mettle.
The South Korean billionaire heads a conglomerate grappling with issues in its huge semiconductor enterprise, the place it has fallen behind within the AI chip race and is poised to launch a administration shake-up.
In the meantime it’s coping with discontent from staff — with Samsung Electronics’ labour union in July occurring its first ever strike in a dispute over pay and circumstances — and buyers, with its shares down greater than 30 per cent this yr even after a $7.1bn buyback introduced final week.
Donald Trump’s US election win and the prospect of commerce turmoil have additionally injected uncertainty into the outlook for the worldwide tech sector and for South Korea, whose economic system relies upon closely on chip exports and its most useful firm.
“Samsung’s disaster can be Korea’s disaster,” stated Park Ju-geun, head of Seoul-based company analysis group Leaders Index.
Park Sangin, professor of economics at Seoul Nationwide College, contrasted Lee’s cautious administration type with that proven by a few of the different family-owned conglomerates that dominate South Korea’s economic system. “Not like the third-generation leaders of Hyundai and LG, Lee has not proven any large or daring decision-making,” he stated.
Samsung performs an necessary position within the world economic system because the world’s largest reminiscence chipmaker. Nevertheless it has fallen behind crosstown competitor SK Hynix within the new development space of excessive bandwidth reminiscence chips wanted for AI {hardware}.
The corporate has additionally made little progress in fulfilling Lee’s ambition of overtaking Taiwan Semiconductor Manufacturing Firm because the world’s main supplier of leading edge logic chips by 2030. And in sectors akin to show and smartphones, which Samsung used to dominate, it’s shedding market share to Chinese language rivals.
Samsung Electronics is now planning an overhaul of the best ranks of its semiconductor divisions, which analysts say have struggled to adapt to a worldwide chip market being reshaped by the rise of AI.
Lee, 56, grew up within the shadow of his father, second-generation chief Lee Kun-hee, whose mission to enhance product high quality was encapsulated by staff smashing a complete stock of 150,000 faulty Samsung cellphones with hammers earlier than throwing them on a bonfire.
“Change all the things besides your spouse and youngsters,” the older Lee famously advised a gathering of executives in 1993.
Having spent 5 years pursuing a doctorate at Harvard Enterprise College, one among Lee Jae-yong’s earliest obligations was in 2000 to supervise an growth into web companies, together with a community safety firm and a web based monetary companies aggregator. However the high-profile “e-Samsung” initiative collapsed into insolvency.
Geoffrey Cain, the creator of Samsung Rising, a historical past of the conglomerate, stated Lee continued his ascent within the firm “with out ever having confirmed himself a balance-sheet success story” regardless of his father pushing for a “extra skilled and meritocratic Samsung”.
Lee grew to become chief working officer at Samsung in 2009, after his father was convicted of unlawful share dealings, tax evasion and bribery that had been supposed to clean the trail for his son’s succession.
Three years later, Lee assumed the title of vice-chair, changing into the conglomerate’s de facto chief in 2014 when a stroke left his father in a coma. Lee Kun-hee died in 2020.
However the youthful Lee quickly grew to become embroiled in a contemporary Samsung succession scandal after it emerged he had spent hundreds of thousands of {dollars} funding the equestrian ambitions of the daughter of former South Korean president Park Geun-hye’s non secular adviser, in an effort to safe his household’s management of the tech group.
Park and Lee had been each jailed on bribery expenses, with Lee serving 19 months earlier than being launched in 2021 and formally pardoned in 2022. Park was pardoned in 2021.
Lee has since assumed the title of govt chair of Samsung Electronics, though he doesn’t serve on its board, nor that of the conglomerate’s de facto holding firm, Samsung C&T.
In February, Lee was acquitted of inventory manipulation and fraud expenses referring to the merger of two Samsung enterprise models in 2015, elevating hopes amongst buyers that this is able to give him extra freedom to deal with the corporate’s challenges.
“His administration actions had been constrained due to his authorized points, which meant he was not able to make daring choices,” stated Jun Kwang-woo, a former chair of South Korea’s Nationwide Pension Service, Samsung Electronics’ second-largest investor.
“He has many good attributes however his palms have been tied by authorized dangers.”
Jun, who stated Samsung’s battery and biopharmaceuticals companies had achieved spectacular development, added Lee was “a really mild man who’s congenial and harmonious and listens rigorously to what others say”.
In a press release, Samsung defended Lee’s document, saying that the corporate had continued to be a “world-leading innovator” in shopper electronics and semiconductors, whereas efficiently diversifying by way of the creation of “new world-class companies” akin to biotech and auto elements.
Lee “has been instrumental to this success, offering the strategic imaginative and prescient for diversified future development, streamlining the enterprise portfolio to strengthen core competitiveness, and leveraging partnerships with main business gamers”, Samsung stated.
On Monday, Jun Younger-hyun, the pinnacle of Samsung’s semiconductor enterprise appointed in Might, introduced a brand new $14.4bn chip R&D centre that he stated would “lay the inspiration for a brand new leap ahead.”
Within the meantime, the corporate hopes to shut the hole with SK Hynix with the discharge of its new “HBM4” reminiscence chip within the second half of 2025, because it seeks to rival SK as a provider to US AI chip designer Nvidia.
An institutional investor in Samsung Electronics stated they might maintain religion with the corporate, noting that it stood to learn from a future upturn in a worldwide reminiscence sector, powered by demand for AI-related infrastructure.
However they added that Samsung wanted to overtake its opaque governance construction in an effort to enhance efficiency and carry its share worth. The inventory hit a four-year low earlier than the buyback was introduced this month.
Lee has tried to domesticate a popularity for humility since his launch from jail. He has been pictured on social media eating at employees canteens and taking selfies with rank-and-file Samsung staff around the globe.
As he stated after his pardon in 2022: “I’ll strive tougher to be a accountable businessman.”
