After avoiding arrest, Samsung heir likely to boost investment into new biz

The Korea Times

The Korea Times

Business

Tue, September 26, 2023 | 09:18

Tech

After avoiding arrest, Samsung heir likely to boost investment into new biz

Posted : 2020-06-09 17:19

Updated : 2020-06-10 10:10

By Baek Byung-yeul

After a court rejected a prosecution request to issue an arrest warrant for Samsung Electronics Vice Chairman Lee Jae-yong, Tuesday, the de facto leader of Korea's largest conglomerate will focus on the group's expansion into new business areas. Lee will also detail measures to strengthen the group's social responsibility initiatives to highlight his role as its leader.

Prosecutors allege that Lee and top executives of the group pushed a controversial "unequal" merger of two group affiliates, Samsung C&T and Cheil Industries, in 2015 to enable a transfer of power to Lee from his father Samsung Chairman Lee Kun-hee.

However, the Seoul Central District Court denied the request saying there was insufficient probable cause to detain Lee and the executives named in the warrant.

Samsung responded to the ruling by saying the uncertainties surrounding Lee are yet to be resolved.

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"It is true that this could remove one of the largest uncertainties Samsung has had, but the problem is not completely resolved yet. Given this, the group is expected to focus on its usual business activities," a company official said.

Industry officials predict that under Lee, Samsung is likely to announce mega-sized investment plans, and merger and acquisition deals. The group is also expected to improve its social responsibility initiatives to restore trust from the public and soothe anger over the previous "misdeeds."

Last month, Lee made a public apology for wrongdoings by the group and promised that Samsung would expand into new areas saying, "I accept the challenge of expanding Samsung's footsteps into new business areas."

When announcing Samsung Electronics' plan to build a new semiconductor production line, using extreme ultraviolet (EUV) chip-making technology, in Pyeongtaek, Gyeonggi Province, the vice chairman emphasized that the group needs to keep investing in new areas, saying, "We shouldn't stop investing even in these hard times."

Samsung Electronics unveiled an ambitious plan last year to become the world's No. 1 in the logic chip sector by 2030, detailing an investment of 133 trillion won ($111 billion) to improve its competitiveness.

Along with global tech giants seeking to evolve and grow in the post-COVID-19 pandemic world, Samsung is expected to aggressively seek M&A opportunities. Since Samsung Electronics acquired U.S. automotive electronics company Harman for 9.3 trillion won in 2017, the group has remained passive.

Industry officials said Samsung will seek M&As with companies that have disruptive technologies but are struggling with financial problems due to the pandemic.

Though there is still a possibility that the Samsung leader could be detained after further investigations by the prosecution, investors think the "owner risk" faced by the group has been mitigated. After the court rejected the warrant for Lee, shares of Samsung affiliates climbed.

Samsung BioLogics, the pharmaceutical arm of the group, closed the day at 676,000 won, up 12,000 won or 1.81 percent from Monday. Samsung Electronics also jumped 1.09 percent to end at 55,500 won. Samsung Fire and Marine Insurance closed at 199,999 won, up 0.25 percent.

baekby@koreatimes.co.kr