[Lee Jae-yong's New Samsung]③ Emphasizing Technology and Win-Win Management... Recently Focused on 'Investment Management' for Survival

From Fundamental Directions in 'Gisul Gyeongyeong' to Concrete Actions by CEOs in 'Tuja Gyeongyeong'

Samsung Electronics Chairman Lee Jae-yong visiting Gwangju partner company DK for the first time since becoming chairman on the 28th of last month, taking a commemorative photo with executives and employees. (Image source=Yonhap News)

[Asia Economy Reporter Moon Chaeseok] "No matter how much I think about it, first, second, and third, it all comes down to technology." "We must invest in technologies that do not exist in the world." "Samsung, which has grown with the support of the people, should rightfully share and cooperate with our society especially at times like these."

These are messages left by Samsung Electronics Chairman Lee Jae-yong on June 18, last month on the 27th, and February 26, 2020, respectively. They contain three management keywords: 'technology, investment, and coexistence.' He made these remarks after returning from a European business trip on parole, just after being promoted from vice chairman?where he had remained for nearly ten years despite being effectively the group leader?to chairman, and during the national crisis at the early stage of the COVID-19 pandemic when deaths were surging. Chairman Lee has consistently emphasized 'technology, investment, and coexistence' in extreme situations where he personally, Samsung Group, and even the nation faced crises.

Samsung Electronics Chairman Lee Jae-yong attended the closing ceremony of the "2022 International Skills Olympics Special Competition Goyang" held at KINTEX in Goyang-si, Gyeonggi-do on the afternoon of the 17th of last month, presenting medals to the winners in the cybersecurity category. (Photo by Yonhap News)

According to the business community on the 7th, Chairman Lee began making notable remarks since 2006 when he was a Samsung Electronics executive director. After a business trip to Japan in 2006, he told the technology head, "Korea is a country developed based on manufacturing, and Samsung is a company that has grown through manufacturing. Samsung must take the lead in creating a culture where excellent technical personnel are valued and respected so that both the company and the nation can develop." This statement drew attention by defining the group's identity as a 'technology manufacturing company.'

Sixteen years later, on the 28th of last month, after becoming chairman for the first time, he practiced 'walking the talk' by visiting Gwangju partner company DK (DK). He visited a company that manufactures precision press molds, which are 'frames' for mass-producing standardized products. This move attracted attention from the business community because Chairman Lee had previously referred to mold engineers as "the saviors of Korea and Samsung." At the 2009 WorldSkills Competition in Calgary, Canada, he emphasized, "The competitiveness of molds, injection molding, and lathes ultimately depends on people, and Samsung started supporting technical personnel not only for the company's success but also to systematically nurture the younger generation and provide them opportunities to enter society."

While he emphasized 'technology and coexistence' since his executive director days, recently, his remarks related to 'investment' have increased significantly. According to the business community, emphasizing 'technology' is seen as a fundamental 'directional guideline,' whereas executing investments is regarded as 'concrete action' as a CEO. Chairman Lee began making numerous investment-related remarks in 2019. That year marked Samsung Group's 50th anniversary and the declaration of a new challenge to become the number one system semiconductor company, not just maintaining the 'super-gap' position in memory semiconductors. In June 2019, he stated, "The driving force behind continuous innovation over the past 50 years has been investment for the future that was not stopped even in difficult times."

Samsung Electronics Chairman Lee Jae-yong (center) poses for a commemorative photo with Peter Wennink, ASML CEO (left), and Martin van den Brink, ASML CTO, at ASML headquarters in Eindhoven, Netherlands, on June 14 (local time). (Photo by Yonhap News)

Whenever the 'Samsung crisis theory' surfaced, Chairman Lee's investment-related remarks intensified. On May 24, when Samsung announced plans to invest 450 trillion won over the next five years, he famously said, "I don't know the exact number, but we are putting our lives on the line." On August 19, after the 'Liberation Day special pardon,' he attended the groundbreaking ceremony of the Giheung semiconductor R&D complex and emphasized, "Let's continue the tradition of valuing technology and making preemptive investments." This statement summarized 'technology investment' as a group 'tradition.'

The business community interprets that such remarks are difficult to make without establishing a philosophy that securing 'innovative technology' is directly linked to gaining financial market credibility necessary for 'investment,' enhancing group brand value, managing risks such as politics and policies, securing major customers, and managing stock prices. Kim Kyung-jun, CEO of CEO Score and a corporate analysis expert, said, "After the late Chairman Lee Kun-hee stepped down from frontline management and Chairman Lee Jae-yong was unable to make investment decisions worth tens of trillions of won properly, Samsung Group has been almost without 'top leadership' for the past decade." He evaluated, "Chairman Lee's direct emphasis on 'investment' expresses his will to lead future investment decisions as the group's undisputed 'top leader.'"

Inside and outside the business community, the semiconductor, bio, and telecommunications sectors are cited as the core of Chairman Lee's 'New Samsung' management. These are globally promising high value-added industries and areas where the capabilities of major group affiliates such as electronics and biologics are concentrated. Notable technological achievements in these areas include the rumored acquisition and merger (M&A) of British semiconductor design company ARM, leading-edge nano-process competition in foundries (both semiconductor), maintaining the 'super-gap' position in CDMO (contract development and manufacturing organization) (bio), and the commencement of a pilot plant for all-solid-state batteries (electric vehicle batteries).

There is little disagreement that Chairman Lee's role is decisive in translating investments into execution. The consensus is that the success or failure of the 'New Samsung' hinges on whether innovative technologies are converted into investment execution. CEO Kim said, "In the past, Samsung overcame crises with its unique organizational strength and tenacity, but the key point to watch for the success of the New Samsung is how much of this genetic trait remains among current Samsung employees and how well it functions." He added, "Criticism that Samsung's unique tension has weakened and its fierceness has disappeared should be taken to heart."