Lee Jae-yong, chairman of Samsung Electronics, was acquitted by the Supreme Court on charges of unfair mergers and accounting fraud on the 17th, freeing him from the judicial risks that have plagued him for the past decade. Now, as the chairman has the opportunity to normalize the control tower of Samsung Electronics, which had been non-functional during his numerous trials and court appearances.
In the past, Samsung Electronics focused its efforts on synergy and new business promotion for major affiliates through the Future Strategy Office. However, after the chairman became a target of judicial power due to accusations of political intervention and unfair mergers between Samsung C&T and Cheil Industries, the company has been operating a functional alternative organization called the business support task force, known as a 'mini Future Strategy Office.'
The highest decision-makers, including the chairman, maintained a conservative management stance amid fears that the chairman could be re-arrested at any time. Kim Gi-chan, an honorary professor at the Catholic University of Korea's Business Administration Department, noted, 'The past decade was a time when Chairman Lee Jae-yong was trapped in a structure from which he could not move as a manager' and explained, 'The chairman had no choice but to delegate all authority to the board of directors and adopt a defensive posture in management.'
◇ Samsung's 'lost decade'... A crisis created by a leadership vacuum
Since the chairman became embroiled in the political intervention scandal in 2016 and began to shuffle between prosecutors and court, Samsung's leadership has virtually remained in a state of persistent vacuum. The following year, the Future Strategy Office, which was the control tower of Samsung, was disbanded, plunging not only Samsung Electronics but the entire Samsung Group into confusion.
Professor Kim Gi-chan stated, 'The leadership vacuum became a major turning point that brought significant changes to Samsung's organizational culture.' It has been pointed out that not only the disbandment of the Future Strategy Office but also the disappearance of the empowerment system for professional managers, which was the driving force of Samsung Electronics' golden years during the era of former chairman Lee Kun-hee, weakened its competitiveness as a global corporation. Professor Kim added, 'Instead of bold decisions by the chairman, bureaucracy emphasizing regulations and procedures began to deepen, causing delays in global speed competition.'
Amid such uncertainty, Samsung Electronics transformed into a conservative organizational structure that sought financial stability rather than pursuing new technologies and investments. The business support task force has effectively replaced the Future Strategy Office, and the identity of a technology company that once responded quickly to global market trends and was not afraid to challenge bold new technology developments began to fade. Professor Kim remarked, 'The fact that employees have adopted a passive culture of waiting for approval from above instead of working as if they own the business is a product of the leadership vacuum.'
Under prolonged judicial risks, Samsung Electronics' technological competitiveness is paying the price of the lost decade. In particular, its world-leading memory semiconductor technology has failed to adequately adapt to the artificial intelligence (AI) era, allowing the second-ranked company, SK hynix, to surpass it, and it has dropped to the level of the third-ranked Micron in the U.S. In the AI-specialized memory segment, high bandwidth memory (HBM) business continues to face losses, and the foundry business, which has been actively invested in since the mid-2010s, has become a 'headache,' recording even tens of billions in losses each quarter.
◇ Lee Jae-yong's leadership on trial... 'It's impossible to overcome the crisis with existing methods'
The evaluation has been made that the leadership of Lee Jae-yong, now freed from the shackles of judicial issues for 10 years, is now on a full-fledged trial. In the business community, many agree that normalizing the virtually halted group control tower and making bold decisions on pressing issues are the chairman's top priorities.
The market is paying attention to whether Samsung will resume large mergers and acquisitions (M&A), which had been subdued following the $9 trillion acquisition of Harman in 2017. Recently, it has acquired German heating, ventilation, and air conditioning (HVAC) company Plact and digital healthcare company Zeels, but the dominant view is that these are small-scale M&As that merely complement existing businesses rather than fundamentally strengthening technological competitiveness. Analysts suggest that M&A is essential for overcoming the crisis in the semiconductor sector, which is at the heart of Samsung.
As Samsung's success formula, which dominated the market with overwhelming technological power, has encountered limits, there are increasing calls for the need to find new ways to quickly forge breakthroughs. As the era of AI semiconductors arrives, processes are becoming more complex, and the importance of alliances with other companies has grown, yet Samsung continues to maintain a closed strategy centered on internal R&D. A business source noted, 'The inability to make bold investments and strategic partnerships for the future is one of the significant issues arising from the chairman's absence,' and added, 'The M&A in the semiconductor sector led directly by the chairman would send the most definitive signal to the market that we are starting to prepare for the future again.'
There are also calls for more fundamental reforms to overcome crises both inside and outside Samsung. Professor Kim pointed out, 'The entrepreneurial spirit that used to allocate billions to the field has disappeared, and a culture of 'Samsung bureaucrats' looking only upward has spread throughout the organization,' adding that 'overcoming the current crisis is impossible with the existing management-centered approach.' He concluded, 'Ultimately, the solution is for Chairman Lee Jae-yong to restore the delegation of trust in people that was practiced during the eras of Lee Byung-chul and Lee Kun-hee, and to establish a culture where autonomy and accountability are granted to the field and evaluated based on performance.'