SEOUL, Aug. 10 (Yonhap) – The Justice Ministry yesterday decided to grant parole to Lee Jae-yong, vice president of the Samsung group, before he serves his full prison sentence of two and a half years. But this parole will not allow Lee to resume his activities as boss of the Samsung group.
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This conditional release imposes a monitoring and a ban on carrying out professional activities, unless his sentence is over, and this could continue to prevent him from determining the broad lines of the Samsung group’s investments.
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◇ Still restrictions after his release
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The Aggravated Sentences for Specific Economic Crimes Act prohibits those convicted of embezzlement or breach of trust involving amounts in excess of 500 million won ($ 436,300) from working for companies related to their crimes or any other person. institution receiving government grants.
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The ban lasts for five years from the day the person concerned finishes serving his prison sentence.
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In addition, other lawsuits against him are underway, including the controversial merger between two subsidiaries of the Samsung group and the alleged use of propofol, a numbing drug banned for individuals.
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The controversies do not stop there. Civic organizations and the Korean Confederation of Trade Unions (KCTU) are challenging Lee’s parole. These organizations consider this decision to be a privilege since the condition for considering such a release is that he has served 80% of his sentence while this scale was lowered to 60% just before the decision of the Ministry of Justice.
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The resumption of Lee’s activities will therefore be very limited, if not difficult, and major decisions concerning the group’s investments will probably be taken indirectly.
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◇ Pressure exerted by TSMC and Intel, urgent investment
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During his imprisonment, the landscape of the semiconductor industry changed dramatically. In particular, international competition to expand production capacity has become fierce.
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The world’s number one semiconductor foundry, Taiwanese manufacturer TSMC (Taiwan Semiconductor Manufacturing Co), which occupies more than half of the foundry market (54%), has announced $ 100 billion in investments in three years to come as well as the installation of six production lines in the State of Arizona, in the United States, with 36 billion dollars.
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As for Intel Corp., an investment of $ 20 billion was confirmed for the construction of the two production lines just after the announcement of a foundry takeover. The American processor manufacturer plans to merge with GlobalFoundries, the number three in the world market.
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Samsung Electronics Co. is planning to build foundries in Arizona, Texas or New York State with $ 17 billion in investment, but has not yet made a decision on the construction site due to negotiations with local authorities to seek tax and other benefits.
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As for mergers and acquisitions, Samsung plans to conduct “significant” operations in artificial intelligence, 5G and automotive service within the next three years, according to the company announcement. in a press conference held last month.
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Despite these M&A plans for global competitiveness, Samsung only made one merger and acquisition in February 2017 with auto service company Harman International Industries with an investment of $ 8 billion.
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With the release of Lee Jae-yong, Samsung is expected to look to make big decisions in order to maintain its position in the fiercely competitive global electronics market, as industry professionals jointly felt that “the boom in investment in the The semiconductor industry is becoming very competitive these days, unheard of in history, and leadership to quickly decide on investments and mergers and acquisitions is needed ”.
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