Samsung rebounding after Lee’s third year as chairman
Samsung Electronics Executive Chairman Lee Jae-yong, center, speaks with Nvidia CEO Jensen Huang, right, and SK Group Chairman Chey Tae-won, left, during a Korea-U.S. business roundtable in Washington, D.C., Aug. 26 (local time). Yonhap
Samsung Electronics Executive Chairman Lee Jae-yong marked three years at the helm of Korea’s largest conglomerate on Monday, as the group shows signs of renewed momentum.
After a year clouded by concerns over slowing growth, Samsung has begun to turn the tide in recent months with a rebound in its semiconductor business and the easing of Lee’s legal uncertainties, fueling optimism about a broader recovery across the group.
Lee became chairman of Samsung Electronics on Oct. 27, 2022, two years after the death of his father, former Samsung Group Chairman Lee Kun-hee. Upon his appointment, he told executives of Samsung affiliates that “now is the time to act with greater boldness and ambition.”
Since then, Lee has largely refrained from making public remarks on running the tech giant, instead maintaining a quiet leadership style and stressing Samsung’s role in the Korean economy and society during his public appearances.
However, questions were raised over Samsung’s semiconductor prowess as the company’s profitability slowed down, with critics questioning the company’s corporate culture and leadership around the time of the second anniversary of Lee’s chairmanship.
In March this year, he took a more assertive tone, saying that “Samsung has lost its true strength” and urging executives to “act boldly with a do-or-die determination.”
Since then, Samsung Electronics has begun to stage a turnaround as its chip business showed signs of recovery. Profits have improved in the high-bandwidth memory (HBM) segment for artificial intelligence (AI) accelerators, which had been cited as the main cause of the chip division’s downturn. Its loss-making foundry and chip design businesses have also started to show signs of improvement.
Earlier this month, Samsung Electronics estimated its operating profit for the third quarter at 12.1 trillion won ($8.48 billion), up 31.81 percent from a year earlier, indicating solid recovery amid an upturn in the global memory chip market. During the same period, sales are expected to reach 86 trillion won, which would be its largest quarterly revenue.
The chip-making Device Solutions division is expected to post an operating profit of at least 5 trillion won — more than 10 times the 400 billion won recorded in the second quarter of this year.
Samsung Electronics Executive Chairman Lee Jae-yong leaves the Seoul High Court in Seocho District on Feb. 3, after the court acquitted him of charges related to a merger between two Samsung affiliates. Korea Times photo by Hong In-kee
The removal of Lee’s personal legal risks also added momentum to the group’s recovery. In July, Korea’s Supreme Court acquitted him of charges related to a controversial merger between two Samsung affiliates, freeing him from his most significant legal burden.
After the ruling, Lee embarked on a series of overseas trips to strengthen partnerships with global tech leaders. In July, he attended Google Camp in Italy, where he met with the CEOs of Meta, Google and OpenAI. The following month, Samsung secured key foundry deals with Apple and Tesla. Earlier this month, the company also signed comprehensive partnerships with OpenAI on AI infrastructure, including a supply agreement for HBM chips.
Entering his fourth year as Samsung’s chief, the remaining challenges for Lee are reclaiming Samsung’s technological edge in HBM and producing tangible results in robotics, an area that has yet to yield visible outcomes.
Though Samsung has achieved rapid profit recovery amid the global upturn in dynamic random access memory, its key rival SK hynix still holds technical leadership in the HBM market. Also, the company’s long-term growth will depend on how effectively it can secure orders not only for HBM but also for a broader range of advanced chips used in AI data center accelerators.
The company also acquired a robot firm and launched a dedicated task force for robotics last year, but is yet to make meaningful progress. With Chinese firms already dominating the market, Samsung now faces the task of devising a breakthrough strategy to turn the tide.
As the chief of Samsung Group, Lee also faces key short-term tasks, including the scheduled spin-off of Samsung Bioepis from Samsung Biologics and his possible return to the board of Samsung Electronics.
Samsung Biologics, a contract drug manufacturing and development company that has emerged as the group’s new cash cow by setting record earnings each quarter, plans to separate its fully owned drug development subsidiary Samsung Bioepis into an independent company starting next month.
Although there has been little shareholder opposition, market expectations remain divided over the potential impact of the spin-off on Samsung Bioepis’ stock price.
Another point of attention is whether Lee will return as a registered board member for Samsung Electronics. On Oct. 21, Lee Chan-hee, chairman of Samsung’s Compliance Committee, told reporters that “many members of the committee still believe his return is necessary from the perspective of responsible management.”