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[News Focus] Lee puts compliance 1st in ‘new Samsung’ vision

For business, Lee makes SoC chips top priority, raising expectations for more investments ahead

Samsung Vice Chairman Lee Jae-yong checks out the P3 construction site in Pyeongtaek, Gyeonggi Province, on Monday. (Samsung Electronics)
Samsung Vice Chairman Lee Jae-yong checks out the P3 construction site in Pyeongtaek, Gyeonggi Province, on Monday. (Samsung Electronics)


For Samsung, South Korea’s No. 1 business empire, 2021 could be a year of historic changes under its third-generation leader, if things turn out as the company hopes.

Amid adverse conditions expected out in the market under the unending pandemic, the biggest Korean tech giant appears to be bracing for more internal and fundamental changes in response to the needs of the time, amid a court verdict on its de-factor chief, Samsung Electronics Vice Chairman Lee Jae-yong.

On behalf of the leadership team, Kim Ki-nam, vice chairman and CEO of Samsung’s semiconductor business, said in his New Year’s message delivered via an online conference on Monday, “Changes across society and the economy are sped up by the COVID-19 pandemic.

“With the emergence of new technologies and businesses, companies are facing greater challenges as transformation into a data and intelligence era speeds up,” he said. “Amid this wave of changes, we have to make 2021 a starting year for change for the future.”

Kim also emphasized compliance is one of the foremost tasks for Samsung this year.

“An autonomous and proactive compliance culture needs to be settled and the company also needs to actively respond to social demand for prevention of industrial accidents,” Kim said.

Samsung has been putting compliance first among core values like change and innovation since last year after suffering public criticism for its heir’s involvement in the corruption scandal that brought down the former president.

As Samsung heir Lee Jae-yong, the only son of the late Chairman Lee Kun-hee, is waiting for the court’s final ruling on his bribery case, scheduled to be made Jan. 18, eyes are on the heir apparent’s words and moves, which hint at potential changes to be made under him.

Samsung heir Lee Jae-yong drew attention in court last week by making a tearful vow to reform the family-run conglomerate, built over the last five decades, to be more law-abiding, moral and transparent.

The two biggest changes appear to be taking shape as Lee promised, though it is yet too early to judge.

It is still controversial, but Samsung has launched an independent external committee that monitors compliance of all of its affiliates, and has formed compliance offices under CEOs of each affiliate.

In his final statement during the last trial, Lee again promised to step up compliance measures, especially for the so-called “new control tower,” Business Support TF, that is led by his close aides.

Unlike his father, who maintained a “no labor union” policy over the past 50 years, the scion also pledged to guarantee labor rights and communicate with each Samsung affiliate’s trade union.

So far, 12 Samsung affiliates have formed labor unions under the Federation of Korean Trade Unions, starting with Samsung Electronics in 2019. 

Samsung Vice Chairman Lee Jae-yong inspects the EUV line in Pyeongtaek, Gyeonggi Province, on Monday.
Samsung Vice Chairman Lee Jae-yong inspects the EUV line in Pyeongtaek, Gyeonggi Province, on Monday.

In business, Lee has pledged that Samsung will focus on what it does best.
To show what that means, on the first working day of 2021, Lee started off by visiting the construction site of Samsung’s newest semiconductor fabrication line in Pyeongtaek, Gyeonggi Province.

“Let’s take a leap toward a new Samsung in 2021,” Lee told the heads of the chipmaking unit and partners who joined the trip. “Together with our partners, academia and research institutions, let’s make a new legend in the system-on-chip market.”

Lee visited the P2 line, which is anticipated to serve as the most cutting-edge semiconductor production hub, both for memory and foundry.

According to the company, Lee joined a ceremony to mark the bringing-in of foundry equipment, and held a meeting with the top brass of the semiconductor business to check on its mid- and long-term strategies. The heir discussed the company’s plans to install extreme lithography equipment for foundry use, which would give it a competitive edge over its rivals. Last year, Lee flew to the Netherlands to hold talks with EUV equipment manufacturer ASML.

The P2 line began production for Samsung’s own memory chips last year, and is planned to start churning out customized chips this year. Samsung has poured about 30 trillion won into the facility. 
Samsung Vice Chairman Lee Jae-yong takes part in a ceremony for foundry equipment establishment in Pyeongtaek, Gyeonggi Province, on Monday.
Samsung Vice Chairman Lee Jae-yong takes part in a ceremony for foundry equipment establishment in Pyeongtaek, Gyeonggi Province, on Monday.

The foundry business is part of Samsung heir’s first concrete goal in business to make Samsung the world’s No. 1 system-on-chip business by 2030. Lee, alone, announced the goal and 133 trillion won investment plan in 2019 on behalf of Samsung and his father.

Lee also took a tour of the construction site for P3, the third production facility to be completed next year.

“The vice chairman’s visit to the new semiconductor facilities suggests his determination for making preemptive investments to achieve the goal he has set,” a Samsung official explained.

Samsung broke the ground for P3 last year, with an estimated investment budget of more than 30 trillion won. Samsung is expected to use the P3 for all kinds of future chips, including SoCs for autonomous driving, artificial intelligence and 5G, possibly starting from 2023.

By Song Su-hyun(song@heraldcorp.com)
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