Lee Jae-yong's 14 On-Site Visits This Year Mark a 'Relentless Schedule'... Judicial Risk Remains a Challenge

[Asia Economy Reporter Kim Hyewon] Samsung Electronics' second-quarter 'earnings surprise' amid the worst uncertainties is attributed not only to market factors but also to the extraordinary series of on-site management by the group head, which is evaluated to have enhanced the frontline's crisis response capabilities.

According to the industry on the 7th, Samsung Electronics Vice Chairman Lee Jae-yong has engaged in on-site management 14 times this year. Considering that the head of the group typically entrusts business operations and short-term performance to professional managers while making strategic decisions and drawing the group's future vision based on mid- to long-term plans, Lee's active involvement in crisis management this year is an exceptional case.

A Samsung official stated, "It appears that he had no choice but to step into frontline management to respond to unprecedented crises caused by successive adverse factors such as the COVID-19 pandemic, intensified US-China confrontation, and Korea-Japan conflicts this year."

Vice Chairman Lee inspected all business sites across core sectors including semiconductors, displays, smartphones, and home appliances. Notably, in May, he traveled to the semiconductor plant in Xi'an, China, undergoing COVID-19 tests three times over three days. In the past month, he has chaired relay meetings with presidents of the semiconductor and product divisions, visited the Semiconductor Research Institute, Suwon Home Appliance Division, semiconductor subsidiary Semes, and even the in-house venture program C-Lab, demonstrating a rigorous schedule.

Although Samsung Electronics achieved better-than-expected strong performance, the internal atmosphere is not entirely optimistic. The greatest adverse factor, the 'judicial risk,' still remains as a management uncertainty. Since the special prosecutor investigation and trials began at the end of 2016, normal management has been difficult, and there is persistent anxiety about the future due to the possibility of facing different trials over similar issues. If the prosecution proceeds with indictment despite the investigation review committee's recommendation to suspend the investigation and not prosecute, Vice Chairman Lee will have to appear in court weekly again for several years. The Wall Street Journal (WSJ) pointed out, "Over the past three years, the company has been virtually paralyzed due to Lee's legal issues," and "there has been a lack of bold challenges in new growth areas."