Leadership vacuum troubles Samsung amid global chip shortage - The Korea Times
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Leadership vacuum troubles Samsung amid global chip shortage

Samsung Electronics Vice Chairman Lee Jae-yong enters the Seoul High Court to attend a retrial of his bribery case held Jan. 18. Korea Times photo by Bae Woo-han
Samsung Electronics Vice Chairman Lee Jae-yong enters the Seoul High Court to attend a retrial of his bribery case held Jan. 18. Korea Times photo by Bae Woo-han

By Kim Bo-eun

A prolonged leadership vacuum at Samsung Electronics has placed the semiconductor giant in a tough spot with strategic decisions over new investments in the U.S. being delayed. Meanwhile, amid the global shortage of semiconductors, rival TSMC of Taiwan is building a large plant there.

Samsung chief Lee Jae-yong was jailed in January after receiving a two-and-a-half-year prison sentence for bribing former President Park Geun-hye and her confidante Choi Soon-sil. Lee is currently hospitalized after receiving emergency surgery for appendicitis, March 19.

The White House, meanwhile, is inviting executives of companies in the chip industry for a meeting with senior officials, April 12. The U.S. presidential office said earlier this week that the list of participants and companies taking part in the meeting will be unveiled nearer the meeting date.

A Bloomberg report stated that executives of firms including Samsung Electronics, General Motors and GlobalFoundries are set to discuss the chip shortage with U.S. National Security Advisor Jake Sullivan and National Economic Council Director Brian Deese.

Carmakers as well as manufacturers of electronic devices are struggling to source chips as supplies remain limited while demand has spiked for vehicles and electronic gadgets during the COVID-19 pandemic as people have opted to buy cars instead of using public transportation, while remote work and school education have become the new norms.

Samsung maintained Thursday it could not confirm the White House invitation, but reports stated internal meetings were taking place on who would attend. Samsung Electronics' head of device systems, Kim Ki-nam, is likely to attend the meeting if Samsung does take part.

The conglomerate has yet to decide on the location of a new 19 trillion won ($17 billion) chip plant ― an official said Samsung is still weighing multiple sites, including locations in Austin, Arizona and New York.

But talks are known to have progressed with the state government of Texas for Samsung to build new production facilities in Austin, where it already has a plant. Samsung has asked the local government to grant tax breaks of up to $800 million over a 20-year period.

Samsung's decision on the location of the new plant will come as the Jo Biden administration seeks to attract chip manufacturers to the U.S. as a means to secure a safe chip supply and contain the growing influence of China with its technological ascent. The absence of the leader has made Samsung delay this crucial decision for new investment amid the prolonged COVID-19 pandemic.

"It is extremely difficult for Lee to make any strategic decisions while in jail as the visiting times for Samsung executives have been restricted to only 10 minutes, which makes it impossible for such decisions to be discussed," an industry official said. "Risks arising from ongoing litigation will continue to weigh on the company."

There is a sense of crisis at Samsung, as its rival TSMC is building a $12 billion plant in Arizona to ramp up production capacity. Intel also stated plans last month to invest $20 billion to set up two new fabrication plants in Arizona.

Meanwhile, the Samsung heir is set to face more court battles. Lee is expected to be discharged from hospital this weekend to attend another trial to be held later this month over a disputed merger of two Samsung affiliates and alleged accounting fraud.

Kim Bo-eun bkim@koreatimes.co.kr


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