[ED] Samsung sheds layer of risk

IT giant must focus on advanced chips, AI competitiveness in fair, transparent manner

A Supreme Court trial may still await in the future, but Lee Jae-yong, executive chairman of Samsung Electronics, has shed a major layer of judiciary risk. The Seoul High Court found Lee not guilty on Monday of 19 financial criminal charges in the 2015 merger between two Samsung affiliates — Samsung C&T and Cheil Industries. The merger is regarded to have played a critical role for Lee to consolidate control of the conglomerate he managed since 2014 when his father Lee Kun-hee had an incapacitating heart attack. Along with Lee, 13 key Samsung executives were also cleared of the charges.

The appellate court basically upheld a February 2024 district court's ruling, which had also concluded that the merger was not unfair and did not cause losses to shareholders. The prosecutors for the appellate court had revised the indictment, taking note of a separate court ruling in August on a Cheil subsidiary, Samsung Biologics, that partially acknowledged breach of accounting standards took place to justify the merger. The appellate court however determined that the prosecutors' charges were "not proven beyond a reasonable doubt," and also added that "criminal punishment cannot be based on speculation and scenarios."

Caution prevailed following the ruling, with Lee remaining tight-lipped. But as district and appellate court trials determine the veracity of facts and whether legal principles were aptly applied, the business community expressed relief that Lee's nearly 10-year-long path of litigations and judiciary risks may be ending. Lee's judiciary disputes began since 2016 where he was convicted in 2017 over separate bribery charges related to the merger and former President Park Geun-hye and her confidant. He served jail time for this before being ultimately pardoned in August 2022 by President Yoon Suk Yeol.

As unprecedented technological upheaval is underway globally while the second Donald Trump administration is aggressively wielding tariffs against close trade partners, Korea's No. 1 conglomerate undoubtedly sees the need to shift to aggressive investment and expansion. Samsung, despite its total market capitalization shrinking to 300 trillion won ($205 billion) from 500 trillion won in 2021, is a significant player in the Korean economy. Lee's meeting in Seoul with OpenAI chief Sam Altman and SoftBank Group head Masayoshi Son on Tuesday is one example of such pursuits. The tech behemoth retains the ability to upgrade its technology and advance into new sectors in a transparent and fair manner. A binding trial schedule and required court appearances — including an invitation to attend Trump's first inauguration in 2016 that was dashed by a travel ban — should free Lee's schedule to pursue aggressive investment steps both at home and abroad.

While Trump has abruptly announced a monthlong moratorium on the 25 percent tariffs against Canada and Mexico for the moment, he continues to call for tariffs against the European Union as well as other countries with a trade surplus against the United States. He has not directly mentioned Korea, but the abovementioned actions will undoubtedly affect Korea's export-fueled economy.

More significantly, companies cannot respond lethargically to the rally of generative AI models and their applications. The deepening of the AI rivalry, taken to another level by the sudden rise of the Chinese AI startup DeepSeek, should make engineers and corporate decision-makers bolt out of their chairs and jump-start their efforts.

For Samsung, this means working toward regaining its technological prowess especially in development of high-bandwidth memory (HBM) chips, a key sector in the AI-fueled semiconductor industry. The most recent quarterly figures showed that Samsung Electronics' chip division posted a lower-than-expected operating profit of 2.9 trillion won while SK hynix, which has the advantage in HBM chips, posted 8.08 trillion won. Samsung has also has been trailing behind the Taiwanese foundry titan, TSMC. Despite the domestic political turmoil in Korea, policymakers should facilitate progress by passing critical legislations such as the Semiconductor Special Bill and taking further deregulatory measures.