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Lee Jae-yong takes on chairmanship of Samsung Electronics

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Lee Jae-yong, who became chairman of Samsung Electronics after being approved by the board on Thursday, heads to the Seoul Central District Court to stand trial for conspiracy allegations in an illegal merger and accounting fraud. Yonhap
Lee Jae-yong, who became chairman of Samsung Electronics after being approved by the board on Thursday, heads to the Seoul Central District Court to stand trial for conspiracy allegations in an illegal merger and accounting fraud. Yonhap

New chief vows to make Samsung trusted, loved by the people

By Baek Byung-yeul

Lee Jae-yong, grandson of Samsung Group founder Lee Byung-chul and the group's de facto leader, was promoted to chairman of the group's crown jewel affiliate Samsung Electronics Thursday. His promotion was approved at a board meeting earlier in the day.

The 54-year-old is the third chairman of the world's top memory chipmaker, succeeding his founder-grandfather and his father Lee Kun-hee.

"The Board of Directors of Samsung Electronics today approved the appointment of Lee Jae-yong as executive chairman of the company. The board approved the appointment, which was recommended by Independent Director and Board Chairman Kim Han-jo," Samsung Electronics said in a statement.

The board added it approved the appointment as the company faces an "uncertain global business environment" and there has been a "pressing need for stronger accountability and business stability."

Lee joined Samsung Electronics in 1991 and was appointed vice chairman in 2012.

On the same day, the Samsung heir appeared at the Seoul Central District Court to stand trial over the suspected illegal merger of two Samsung affiliates in 2015 and alleged accounting fraud at Samsung Biologics.

When asked about how it feels to be the chairman, Lee said, "I will create a company that is trusted and loved by the people."

"I feel a weight on my shoulders. I ask for all of your support," Lee added.

He also shared his thoughts with employees by posting an article on the company's bulletin board Thursday. His thoughts had already been revealed to the top management of Samsung Group during a memorial service for the second anniversary of the death of his father on Oct. 25.

"The reason why we didn't fall behind in the competition is because of executives and employees from across the world who worked hard," he wrote.

He also stressed that "the reality in front of us is severe and the market situation is harsh. Although we are in a difficult situation, this is the moment that we need to prepare for the future and develop our technologies."

The chairman emphasized that "the most important value since the start of the business is talented professionals and technology. We need to bring in and train talented professionals who can change the world regardless of gender or nationality."

Though he officially became the new leader of the nation's top conglomerate, the new chairman is also facing numerous challenges, such as legal battles and the governance structure of the group.

The chairman is still in a legal tussle as he has attended trials over allegations that he conspired with other executives to lower the value of Samsung C&T and inflate that of Cheil Industries before their merger in 2015. Lee is also involved in a legal battle over alleged accounting fraud at the group's drug-making unit, Samsung Biologics.

Lee has been criticized due to these cases as many view they were intentionally executed via illegal avenues to ensure Lee's succession in the group.

Although Lee remains one of the major shareholders of Samsung Group affiliates, it remains to be seen how he will handle the management of each subsidiary as the group's leader. Samsung currently retains the group's web-like holding structure, but Lee vowed in 2020 that he would not pass on management control of the vast conglomerate to his children.

Business-wise, Lee is facing a series of challenges that he needs to tackle to make Samsung Electronics move ahead of its global competitors such as TSMC of Taiwan and Intel of the United States.

The company holds the lead in the memory semiconductor business, but it remains behind TSMC in the foundry business, which manufactures chips for chip designing companies. Industry market trackers TrendForce said TSMC's share in the foundry business in the third quarter was at 53.4 percent while Samsung had 16.5 percent.

On the same day as Lee's inauguration, Samsung also announced its third quarter earnings. The company said its operating profit decreased by 31.39 percent to 10.85 trillion won ($76.5 billion) compared to the same period in 2021 mainly due to weak chip demand.

Baek Byung-yeul

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