Running a massive conglomerate isn’t easy and definitely not something that can be done from jail. Samsung vice chairman and de-facto leader Lee Jae-yong has been imprisoned since January. He won’t seek an appeal of the ruling, meaning that he intends to serve out his entire two-and-a-half-year sentence.
Lee’s approval is necessary for major business decisions. In his absence, the company finds itself in a state of crisis. Decisions related to new investments and future strategy need to be finalized but executives are unable to get the time they need with their leader.
Major decisions being delayed due to leader’s absence
Samsung has proposed a multi-billion dollar investment to the United States. It intends to build a new chipmaking plant amid the global semiconductor shortage. That investment has not yet been finalized likely due to these troubles. On the other than, rival TSMC is already going ahead with its new chip plant in the US.
The company hasn’t decided where its new $17 billion chip plant will be located. It’s considering multiple sites for the project in Arizona, Austin and New York. The delay in this decision may also be attributed to the absence of its leader.
The White House has reportedly invited Samsung to a meeting later this month. The global chip shortage will be discussed at this meeting. As a major player in the industry and a big investor in the country’s semiconductor industry, Samsung will obviously have a seat at the table.
Lee Jae-yong would have likely represented Samsung had he been out of prison. Internal meetings are now underway at Samsung to decide who will represent the company instead. Reports suggest it will be Kim Ki-nam, the head of Samsung Electronics’ device systems division.
It’s very difficult for Lee to make any strategic decisions while he’s in jail. Samsung executives are only given 10 minutes to meet him and that’s obviously not enough time to discuss such delicate matters.
This is particularly troubling for Samsung as TSMC has decided on its $12 billion plant in Arizona to increase production capacity. Intel has also confirmed its $20 billion investment to develop two new fabrication plants in Arizona. Samsung has been unable to make a decision.
These leadership challenges may only get worse as Lee’s legal woes are far from over. He is due to attend another trial later this month over a disputed merger between two Samsung affiliates.