All eyes are on Lee Jae-yong’s next move after the vice chairman of Samsung Electronics, released from jail on parole on Friday, set about saving the nation’s pandemic-hit economy.
Straight from the Seoul Detention Center in Uiwang, Gyeonggi Province, where he served 60 percent of his 2 1/2-year sentence, Lee went to the Samsung headquarters in Seocho, southern Seoul, and stayed there until night. He was reported to have received a briefing from Samsung Electronics Vice Chairman Kim Ki-nam and met with the chiefs of other Samsung Group companies.
Despite expectations that he would play a role in revitalizing the economy or solving the nationwide vaccine shortage, it is unclear how he could do either of those things considering his parole conditions.
Lee, who was found guilty of misappropriating company funds worth 8.6 billion won ($7.3 million) to pay bribes to former President Park Geun-hye, can’t join Samsung Electronics’ board or take on any other official position.
In South Korea, those convicted of embezzling 500 million won or more are banned from working for companies related to their crimes for five years after serving their terms.
Samsung says Lee is exempt from those restrictions as he technically doesn’t work for Samsung anymore, having left the board in 2019 and received no salary ever since.
“The parole terms are actually in the gray area. (But we understand that) Lee was released so that he could get into work,” a high-ranking Samsung official said.
Despite criticism from civic groups that the parole system is being abused as yet another get-out-of-jail-free card for the privileged, the authorities have given the green light to Lee’s economic activities.
On the day of release, President Moon Jae-in, who built his leftist administration on a commitment to social justice, asked for the people’s understanding, saying the decision was in the national interest. Justice Minister Park Beom-kye, who granted parole for Lee, said he had considered “the economic situation under the prolonged COVID-19 pandemic.”
Expectations are running high that Lee’s release could signal Samsung’s investment plans getting back on track, after his absence put a halt to them.
One of Samsung Electronics’ goals is to invest 171 trillion won by 2030 and become the No. 1 global foundry player. The most urgent task is finalizing the firm’s plans to build a second chip plant in the US worth $17 billion, a decision that can’t be made without Lee. Industry officials warn that if Samsung misses its chance to make a timely investment, there won’t be another chance to catch up with TSMC.
TSMC, which controls 50 percent of the world’s foundry market by market share, announced in April that it would invest $100 billion over the next three years and build six chip plants in the US.
Intel, which announced its reentry into the foundry market, is reportedly mulling the acquisition of the world’s No. 3 player, GlobalFoundries, for $30 billion. If that move is successful, the major foundry players will be narrowed down to TSMC, Samsung Electronics and Intel.
Chips account for 20 percent of Korea’s exports, and Samsung’s massive investment could reinvigorate the domestic chip industry.
Samsung officials and watchers say the firm could also benefit from Lee’s personal business networks in navigating through the cutthroat technology competition, as well as the global supply chain reorganization pushed by the US and other major economies.
In October Lee met with top executives of ASML, the world’s leading photolithography equipment maker, at company headquarters in Eindhoven, the Netherlands. During the meeting Lee discussed the development of next-generation chip technology with ASML CEO Peter Wennink and ASML Chief Technology Officer Martin van den Brink.
Lee’s release is also expected to accelerate Samsung SDI’s plans to build its first US battery factory. On the day of Lee’s release, Illinois Sen. Dick Durbin said in a press conference that there were discussions about bringing in a “major Samsung battery facility” during a meeting with Korean delegates last week.
While the decision has not been finalized, said Durbin, the facility could possibly be next to electric vehicle startup Rivian, which said in April that it would source electric vehicle batteries from Samsung SDI.
Above all, the industry is paying keen attention to whether Lee can once again step up as Korea’s “vaccine ambassador.”
On the day of Lee’s release, Korea dispatched a delegation to meet with Moderna representatives over the delay in shipments of vaccines, as the US firm plans to send less than half of the 8.5 million doses it had pledged to send over this month.
It remains to be seen how Lee could intervene. Previously, he acted as a bridge between the Korean government and Pfizer.
The Korean government had no communication channels with the top leadership of Pfizer until early December, when Lee used his personal network and sought the help of Shantanu Narayen, chairman of the US computer software company Adobe, who was an independent director of Pfizer.
Lee and Narayen first met at the Consumer Electronics Show in Las Vegas in 2011. The Adobe chairman visited Seoul to meet Lee later the same year, and the two have maintained ties ever since.
In December, Lee personally phoned Narayen, according to local media.
The Samsung chief was introduced to the head of Pfizer’s vaccine business by the Adobe chairman, providing the Korean government with a way to launch negotiations with the US company.
In April, Seoul announced that it had secured enough additional doses of the Pfizer vaccine for 20 million people.
By Kim Byung-wook (
kbw@heraldcorp.com)
