Lee Jae Yong’s appointment as the New Samsung Chairman and the Future of the Korean Economy
Picture of Lee Jae Yong during President Biden and Yoon’s visit to Samsung’s Pyeongtaek Semiconductor Campus. Photo: POOL / Reuters
Since Lee Jae Yong’s appointment as the Vice Chairman of Samsung Electronics, it took 10 years for Lee to finally inherit his father’s Samsung kingdom amidst Korean political turmoil and a global supply chain crisis.
While this appointment may seem overly highlighted, it is deemed to be one of the most significant events for the Korean economy as a whole.
Samsung is not a typical electronics company that solely manufactures consumer electronics. In fact, the Samsung group is constituted of numerous departments and affiliate companies, which even includes Samsung’s military division for the defense industry and the well-known Samsung Electronics. With the help of its myriad subsidiaries and world-renowned Samsung Electronics, the Samsung group contributes approximately 20% of the Korean GDP ($1.8 trillion), the 10th largest economy in the world.
With immense economic power at hand, it has been crucial for Samsung's board of executives and the Samsung family to choose its chairman wisely. The attention that was given to the previous chairman, Lee Kun Hee, once reached a point where the Korean government intervened in an effort to verify Lee Jae Yong was free from any kind of political corruption to ensure a stable operation of the Samsung group.
Picture of Lee Jae Yong during the Horse Bribery Scandal. Photo: Seung-il Ryu / NurPhoto
This resulted in the infamous Horse Scandal during the administration of Moon Jae-In, where Lee Jae Yong was convicted of being guilty of bribing Choi Soon Sil, a figure who was accused of controlling former Korean President Park Geun Hye as her proxy. Specifically, Lee Jae Yong was sentenced to prison for two years and six months for sponsoring Chung Yoo-Ra, Choi’s daughter, with three horses worth around $3 million under Samsung’s name as she was then a professional equestrian.
However, following the inauguration of President Yoon this year, Lee Jae Yong was selected, among the few, for a presidential pardon as part of Yoon’s effort to stimulate the Korean economy after the economic downturn due to COVID-19. Another reason behind the pardon is the increased competition among chipmakers, specifically between Samsung and TSMC. TSMC, a Taiwanese chipmaker that supplies semiconductors for giants like Apple, has been able to increase its already outstanding market share in the semiconductor industry; TSMC’s current market share is approximately 52.9%, and Samsung only accounts for 17.3% of the market share.
With extreme competition left and right, Lee Jae Yong’s appointment might become a breakthrough for Samsung’s shaky situation, intertwined with political scandals and resulting in the continued growth of the Samsung kingdom.
With the Samsung group standing strong, other economic sectors are more likely to enjoy higher stability and growth despite the frozen global economy with record inflation and interest rates.