Samsung's leadership vacuum

The Financial Times has expressed deep concerns about the jailing of Samsung Electronics Vice Chairman Lee Jae-yong for giving bribes to former President Park Geun-hye. The paper noted that his detention could put the brakes on..

The Financial Times has expressed deep concerns about the jailing of Samsung Electronics Vice Chairman Lee Jae-yong for giving bribes to former President Park Geun-hye. The paper noted that his detention could put the brakes on Samsung’s high-tech drive for artificial intelligence and self-driving vehicles amid tense global competition in industries related to the so-called fourth industrial revolution. It is rare for the FT to worry about the future of Samsung after persistently criticizing the conglomerate’s relatively opaque corporate governance structure.

The court’s judgment should be respected, and the same can apply to the imprisonment of the two former conservative presidents and to the ruling by a local court that ordered compensation for wartime forced laborers and sex slavery victims. We hope no president abuses his or her power to prey on large companies and their leaders in the future.

Korea Inc. faces daunting global challenges. In a jungle in which only the most competitive companies can survive, no one can afford to pause for an indefinite period. Competitiveness in business is not for people who pause — or are forced to pause.

If a global leader in semiconductors does not make a major decisions on investments, it could surrender its top position to rivals immediately. Korea owed much of its success as frontrunner in semiconductors to big ambitious and timely investments from the private sector. CEOs of semiconductor companies habitually embark on tours around the globe to find cutting-edge production equipment and merger or acquisition targets if the need arises. That’s why Samsung’s Vice Chairman Lee was supposed to take a trip overseas later this month after touring Samsung factories in Korea.

Lee’s detention is only good for Samsung’s competitors. Shortly after his detention, Taiwan Semiconductor Manufacturing Company (TSMC), Samsung’s biggest rival, announced its largest-ever investment plan. After struggling to restore its past glory in semiconductors for a while, Japan suddenly has had a golden chance to achieve that goal, not to mention China, which has been exerting all efforts to produce top-caliber semiconductors. Amid a surprising rebound of the digital sector after the coronavirus outbreak, Samsung’s competitors have grabbed at a chance to win against their archrival.

Samsung has been aggressively revamping its businesses while trying to resolve the 10-trillion-won ($9 billion) inheritance tax Lee’s family has to pay after their father passed away last year. A leadership vacuum at this critical moment could deal a critical blow to Samsung and the Korean economy. The government and ruling party must find some way to overcome this crisis before it’s too late.