With inheritance tax paid, Samsung chairman set to expedite future investment

Samsung Electronics Executive Chairman Lee Jae-yong arrives at Seoul Gimpo Business Aviation Center in Gangseo District, Seoul, March 13. Yonhap

With the Samsung Group owner family set to complete one of the largest inheritance tax payments in Korea’s history, Samsung Electronics Executive Chairman Lee Jae-yong is expected to accelerate future investments based on his stronger control over the group.

Hong Ra-hee, the widow of former Samsung Group Chairman Lee Kun-hee, sold 15 million shares in Samsung Electronics worth nearly 3.1 trillion won ($2.1 billion) in a block deal on Thursday. The sale has reduced Hong's stake in Samsung Electronics to 1.24 percent from 1.49 percent.

The sale was intended to fund inheritance tax payments on assets left by the late chairman. Since his death in 2020, the heirs — Hong and her children Jae-yong, Boo-jin and Seo-hyun — have been in the process of paying 12 trillion won in taxes in six installments, starting in 2021. The process is expected to be completed this month, once Hong uses the proceeds from the latest sale to pay the final installment.

The inheritance process strengthened Lee Jae-yong’s grip on Samsung Electronics. Before the late chairman’s death, Hong held a 0.91 percent stake in the company, while Lee Jae-yong owned 0.70 percent. The two daughters held no shares.

After the late chairman died, his 4.18 percent stake was inherited by the family, with Hong receiving three-ninths to hold about 2.30 percent, becoming the largest individual shareholder of Samsung Electronics. Each of the children received two-ninths, raising Lee Jae-yong’s stake to 1.63 percent, while the daughters came to hold about 0.93 percent.

While Hong and her daughters gradually sold shares of key affiliates such as Samsung Electronics, Samsung SDS and Samsung C&T, Lee Jae-yong did not sell his stakes in key Samsung companies, instead relying on dividends and personal loans to finance his payments.

After Thursday’s sale, Lee Jae-yong is now the largest individual shareholder of Samsung Electronics, with 1.67 percent, while the stakes of Hong, Boo-jin and Seo-hyun remain at 1.24 percent, 0.71 percent and 0.77 percent respectively.

Industry officials said Lee Jae-yong’s stake could increase further, as Hong may transfer additional Samsung Electronics shares to him in the future. Along with Samsung Electronics, the current chairman’s stake in key companies in Samsung’s ownership structure has increased during the inheritance process, and his control over the entire group has been strengthened.

With the inheritance tax payments completed, the company is expected to accelerate future investments. Over the past five years, it had to manage dividends and cash flow in line with tax payments, but those constraints have now been lifted.

In the semiconductor business, investments in high-value areas such as high-bandwidth memory and advanced packaging are expected to gain further momentum.

In the mobile and home appliance segments, a reshaping of product competitiveness centered on on-device artificial intelligence is anticipated, while in the biopharmaceutical sector, additional capacity expansion for Samsung Biologics is widely seen as a likely scenario. Large-scale mergers and acquisitions are also being discussed as a possibility.