Will Lee’s release at f help Samsung reverse its decline? Large scale M & A is imperative


According to Tencent technology news on August 10, with the parole of Li yif, vice president and actual “leader” of Samsung Electronics, people’s attention is turning to the future fate of the company this week. With the increasingly fierce competition for leadership in the global chip market, Samsung Electronics’s mission is to become the world’s largest integrated equipment manufacturer.
However, due to the vacuum in the top leadership, the IT giant has always had significant delays in the decision-making process, affecting major investment plans. Lee’s return is expected to speed up the company’s internal decision-making process as Samsung seeks to consolidate its position in the semiconductor industry and find new businesses for future growth. An industry insider said: “the company’s internal expectations that Li Zaili F may start large-scale investment and M & A with its global network are rising again, which will restore the trust of investors and consumers in Samsung.”
The US investment plan needs to be finalized as soon as possible
Samsung’s most urgent task at present is to finalize the investment plan in the United States, which will improve its production and influence in the United States by winning powerful American customers such as Qualcomm, Google and Facebook, and curbing competitors Intel and TSMC.
There are rumors that Samsung plans to build a new chip foundry in the United States. It has been more than seven months, but the final decision has been postponed. Even in moon Jae in May, Samsung failed to announce the final version of the plan. At that time, Kim Keenan, vice chairman of Samsung’s semiconductor department, mentioned during the president’s visit that Samsung would invest about US $18 billion to build a chip factory in the United States, but did not disclose more details.
In five regions of the United States, including Texas, Arizona and New York, Samsung is still considering the benefits and profits of building factories in the United States, including tax incentives. If Samsung wants to catch up with Jidian in the OEM business, the new American factory will be crucial. TSMC, which accounts for more than 50% of the global wafer foundry market, announced that it will invest more than $100 billion in the next three years. According to the May announcement, the company is building five new plants in Arizona.
In the current situation of chip supply shortage affecting all walks of life around the world, the ability to produce enough chips has become very popular. Intel, an American processor developer, also plans to build a new foundry to enter the foundry market. There are rumors that Intel is also preparing to acquire global foundries, a smaller foundry company under the Abu Dhabi Fund, in order to expand its chip manufacturing capacity.
An industry insider said: “timing and speed are important factors in the chip competition. Chip manufacturers around the world are speeding up investment. Li Zaili’s return will help speed up Samsung’s decision-making process. ” Lee Chang Han, vice president of the Korea semiconductor industry association, said: “Samsung’s decision-making power has indeed been weakened due to the absence of Li Zaili. Investment in the semiconductor industry requires a lot of money, and there is an urgent need for responsible people to make decisions. ”
Major acquisitions within three years?
Lee’s parole comes as Samsung is reviewing its investment and M & A plans. With the return of the top decision-maker of the technology giant, industry observers expect Samsung to accelerate its business plan and increase investment and M & A efforts in the near future.
At the conference call last month, Samsung reiterated that it would seek a “meaningful” M & a deal within three years, and said it was studying various fields including artificial intelligence (AI), 5g and automobile. Samsung’s last major M & a deal was in 2016, when it bought American auto giant Harman international industries for $8 billion.
The company said in February that it was seriously considering a takeover within three years, but it was unlikely to release any details unless Li Zaixin returned to management. In 2018, Li announced a plan to invest 171 trillion won (about US $148.9 billion) by 2021 and make Samsung the leader in the system chip market by 2030.
Industry insiders said: “making decisions in areas that require large investment, such as OEM and logic chips, is like betting. This is something that professional managers can’t easily do, but business owners can. ”
However, the implementation of the relevant plans has been shelved for the past seven months and no major achievements have been announced. Samsung is trying to expand its presence in the mobile processor market through its exynos chipset and increase the sales of automobile image processor isocell.
After the heyday of the flagship Galaxy S series, Samsung is also facing new risks from the mobile business. Samsung was the world’s largest smartphone supplier and sold 13.5 million Galaxy S21 series from January to June this year, according to market research firm counterpoint research. The sales volume in the same period last year was 17 million, a year-on-year decrease of 20%.
According to the data of canalys, a market research institution, Xiaomi became the smartphone supplier with the highest smartphone market share last month, and its shipments beat Samsung and apple in the second quarter. Industry insiders said: “Samsung must find a way to solve the stagnation of the smartphone market, either enter the high-end market to compete with apple, or enter the low-end market to beat competitors such as Xiaomi.”
There will be no immediate significant progress in the short term
But observers say that even if Lee returns to business, Samsung may not make significant progress immediately because his activities may be subject to legal restrictions. According to the law on aggravating penalties for specific economic crimes, persons sentenced to misappropriate public funds of more than 500 million won (about US $436000) are prohibited from working for companies related to their crimes or any institutions receiving government subsidies. The ban lasts for five years from the date the offender expires his sentence.

Since Lee was only granted parole, not a presidential pardon, he must abide by the law. However, if Li zairi can obtain special permission from the attorney general, he can be exempted from supervision. Local business lobby groups, including the Korean Chamber of Commerce and industry and the Korean Enterprise Federation, welcomed the approval of Li Zaifu’s parole. At the same time, they hoped that the government would be lenient and provide administrative support for Li Zaifu’s business activities.
Critics say that even if Lee removes such obstacles, Samsung’s future remains uncertain because the 53 year old faces other court proceedings that could lead to his re imprisonment. Li Zaili is currently handling a controversial case involving the merger of two Samsung subsidiaries and suspected accounting fraud. He will also face court trial on charges of illegal injection of sedatives´╝ł Tencent Technology (reviser / Jinlu)