Challenges after Lee’s parole

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Challenges after Lee’s parole

Samsung Electronics Vice Chairman Lee Jae-yong on Friday will be walking out of the jail he has been confined to since January upon the decision to grant him parole on Monday.

Lee meets the requirements for parole as he already served 60 percent of his jail term as of the end of last month and has the public’s support who wish to see him return to help fight economic challenges.

During his void since January, the global chip landscape has been undergoing a seismic change. Samsung Electronics’ supremacy in memory chips since its landmark development of the 64K DRAM in 1992 has come under challenge due to a full force state-backed U.S. return. America has been going all-out to promote the chip industry to prevail over the hegemonic tech conflict with China. It is backing ambitious production by Intel and foundry capacity of Taiwan on U.S. turf. Samsung will have to look over its shoulder and be wary of the fast ascension of rivals.

Taiwan’s TSMC has established itself as an unrivalled foundry through its preemptive migration to next-gen facilities to produce system semiconductors. Its share in the consignment chip segment has reached 56 percent, more than triple of that of Samsung Electronics. The Korean chipmaker has vowed to achieve leadership in foundry by investing 130 trillion won ($113 billion) by 2030, but the capex scheme has not taken off due to a void in leadership. Lee’s full return to management is critical to change the tide. A fast decision in investment direction and scope can be only possible under owner-leader management.

Samsung Electronics had pledged to invest 17 trillion won to build a foundry in Arizona at the request of the U.S. The project also hangs in the air. ASML, the sole supplier of EUV machines critical to churn out chips from next-gen and nano technology, does not meet companies for new shipments unless the chief decision-maker arrives at its doors. Since the machines cost billions of dollars a unit, the Dutch company only deals with a sure order. Samsung Electronics leadership from late chairman Lee Kun-hee to his son maintained a connection with frequent visits.

After institutionalizing law compliance through an oversight committee, governance of Samsung has greatly improved. The group now concedes unions and Lee has vowed not to hand down the management control to his offspring.

The government must grant pardon to help him return to normalized business management. Korea’s chip power is in jeopardy due to Intel’s chase, TSMC’s rise, Japan’s counterattack and China’s ambition. Lee must be at full command to spearhead chip exports.
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