What The Future Holds For Samsung After Former Chairman Lee Kun-Hee's Death

Aadhya Khatri - Oct 26, 2020


What The Future Holds For Samsung After Former Chairman Lee Kun-Hee's Death

With Lee Jae-yong in trouble with the law, the big question now is who is going to replace Lee Kun-Hee as the new leader of Samsung

Lee Kun-Hee, the man behind Samsung Empire, died recently aged 78.

Samsung’s history is deeply intertwined with the history of South Korea. Lee Kun-Hee took over the company from his father, the company’s founder Lee Byung-chul in the 1980s just as South Korea transformed from dictatorship to democracy.

In Lee’s time, Samsung conquered several key areas, including memory chips, semiconductors, displays, as well as other components.

He has led the company to survive a number of challenges, including the 1990s economic hardships. The most memorable events during his time are South Korea’s near-collapse economies under the Asian financial crisis, and the Dot-Com bubble.

After these challenges, Lee invested in what makes Samsung well known today – the Galaxy smartphone line, which is worth about $350 billion.

Samsung Heir Faces Fresh Charges Over 2015 Bribery

After Lee’s death, what raises concern is what the future holds for the company.

Lee Jae-yong, the obvious heir to the throne, got himself into trouble with accounting and stock fraud a few years ago. In 2015, he was charged with bribery and got a 5-year prison sentence. However, his jail time was later suspended.

Lee Jae-yong
Lee Jae-yong, the obvious heir to the throne, got himself into trouble with accounting and stock fraud a few years ago

Back in June this year, Lee was sought after again for the merger of Cheil Industries and Samsung C&T, two of Samsung’s businesses in 2015.

Two years after that, in 2017, the conviction of the merger sparked a business and political scandal, which led to the resignation of Park Geun-hye – South Korea’s former president.

Lee Jae-yong was charged for using the company to pay $35.7m to two organizations led by a friend of Park Geun-hye - Choi Soon-sil. The act is regarded as bribery in exchange for Ms. Park’s support.

In order for the deal to be passed, Lee needed support from South Korea’s national pension fund, explaining why the former president got involved.

Park Geun-hye – South Korea’s former president
the conviction of the merger sparked a business and political scandal, which led to the resignation of Park Geun-hye – South Korea’s former president

After the merger, Lee had what he needed to be the leader of the Samsung Empire.

He was prosecuted for embezzlement, perjury, hiding assets overseas, and bribery. All the charges that resulted in his 5 years of jail time.

Half a year after the conviction, his sentence was reduced to 2.5 years and soon after that, suspended, meaning Lee could walk free.

Lee denied all accusations saying that Samsung did make a huge donation but the company wanted nothing in return.

Lee is also called Jay Y Lee and is Lee Kun-hee’s son.

Samsung Reported Record Sales

Amid the trouble Lee Jae-yong is having and the recent death of Lee Kun-hee, Samsung reported better business results than expected, thanks to the sanctions the U.S put on Huawei – its competitor.

Huawei sanction
Samsung reported better business results than expected, thanks to the sanctions the U.S put on Huawei – its competitor

The owner of the well-known Galaxy brand announced a $10.6 billion (12.3 trillion won) operating profit in a three-month period ending September, exceeding the forecast of 10 trillion won.

While the company disclosed that the quarter’s sales are 66 trillion won, it didn’t elaborate on the detail numbers for each segment nor the net profit. The details will be announced later this month in the final report. After the positive news was out, Samsung’s share price increased by 1.3%.

In the second quarter of 2020, Samsung’s position as the world’s largest smartphone maker was taken by Huawei. However, the Chinese company is expected to be dethroned soon, given the hardship it is facing after the U.S sanctions.

Samsung is also fortifying its standing in India where a wave of boycotting China products is gripping the expansion of Chinese phone makers.

boycotting China products
Samsung is also fortifying its standing in India where a wave of boycotting China products is gripping the expansion of Chinese phone makers

The memory chip business of Samsung has also boomed after Huawei was forced to stockpiled semiconductors before the U.S sanction took effect.

With Huawei busy dealing with the consequences of the sanction and Apple delaying the launch of its first 5G phone to October, things were easier for Samsung on the smartphone market.

As Huawei struggles, Samsung is in for higher margins next year. The rollout of 5G and the folding phone trend will also bring the company numerous benefits. In Q3, the company’s sales is predicted to reach 80.6 million units, an increase of 49% compared to Q2.

Demand for the company’s memory chips is predicted to increase in Q4 when Vivo, Oppo, and other Chinese phone makers order more to take the chance after Apple’s launch the latest iPhones.

With Lee Jae-yong in trouble with the law, the big question now is who is going to replace Lee Kun-Hee as the new leader of the huge company.

>>> Lee Kun-hee, The Force Behind Samsung's Transformation, Died At 78

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