China News Service, March 16th. According to a report by South Korea’s "Joongang Ilbo" on the 15th, the South Korean court restarted the "prison trial" against Samsung Electronics Vice President Lee Jae-yong, who was involved in the case of Samsung's merger and Samsung BIOLOGICS accounting fraud. ".
Lee Jae-yong was sentenced to 2 years and 6 months’ imprisonment for the “Qianzhengmen” case and was imprisoned in January this year. It is expected that cumbersome judicial procedures will be launched in the future regarding the inheritance of his management rights. Samsung also Will continue to face "judicial risk".
Data map: Li Zairong, vice chairman of Samsung Group.
"Illegal merger" or "normal procedure"?
On the afternoon of March 11, the Seoul Central District Court heard the opinions of the prosecutor and Lee Jae-yong against 10 people including Lee Jae-yong and Samsung related persons who were prosecuted for allegedly violating the Capital Market and Financial Investment Law. Prepare for trial case.
During the trial activities that day, the prosecution made a statement and spent more than an hour introducing the prosecution facts of the case.
The prosecutor stated that “Lee Jae-yong and the relevant personnel of the Future Strategy Office illegally promoted the merger of companies and conducted accounting frauds in order to achieve the purpose of helping Lee Jae-yong to inherit the right to operate.”
Prosecutors believe that when Samsung C&T and Cheil Industries merged in 2015, the value of Cheil Industries Co., Ltd., in which Lee Jae-yong held a large number of shares, was pushed up, while the value of Samsung C&T was deliberately lowered.
Li's lawyers in Rong said that "all this is a normal merger procedure."
The team of lawyers stated that “the merger of the two companies is based on business needs and aims to respond to changes in the regulatory environment, optimize the holding structure, and stabilize the company’s operating rights.
The lawyers pointed out that Samsung C&T’s stock price had been declining at that time, while Cheil Industries’ share price continued to rise. “If the merger was carried out at other times, the result would only be more unfavorable for Samsung C&T.”
Worried about the "absence of president" leading to delays in major corporate decisions
The trial of this case is more complicated than the Qianzhengmen case. The evidence alone is 190,000 pages, and the case is quite large.
The legal profession predicts that it will take at least 3 years from the beginning of the trial to the verdict.
Therefore, some people in Samsung and the Korean business community are worried that the "lost decade" may become a reality.
The bigger problem is that in the face of the rapidly changing domestic and international operating environment after the outbreak of the new crown pneumonia epidemic, Samsung, which is "absent of the president", may not be able to respond keenly.
Especially in the fierce OEM competition with rivals, Samsung's decision on large-scale investment and mergers and acquisitions (M&A) may be delayed.
Experts generally predict that the semiconductor industry will enter a super prosperous cycle this year.
The market research company "Omdia" predicts that the DRAM market, which is a typical storage semiconductor, is expected to expand from US$66.3 billion last year to US$104.4 billion next year. Gartner and the World Semiconductor Trade Statistics Organization (WSTS) also predict that this year’s global Sales in the semiconductor market will increase by 8.7% over last year, reaching 477.5 billion US dollars.
"A missed opportunity could lead to a complete collapse, repeating the mistakes of Japan"
Samsung Electronics is still hesitating about its US$17 billion US semiconductor factory investment plan.
The factory was originally planned to be built in the Austin, Texas area, and now there are options such as Phoenix, Arizona and Genesee County, New York, but they have not yet been decided.
Large-scale mergers and acquisitions are even more difficult.
At present, Samsung Electronics has about 121 trillion won of liquid assets that can be quickly realized. In view of the recent shortage of automotive semiconductor supplies, the industry generally predicts that Samsung Electronics may acquire related semiconductor manufacturers. However, according to convention, Samsung Electronics has never been Li Zairong conducted large-scale mergers and acquisitions during his imprisonment.
An Qixuan, an executive officer of the Korea Semiconductor Industry Association, said, “The semiconductor industry must develop rapidly in an environment of fierce competition and cooperation between countries. Samsung Electronics may be isolated in the industry due to the absence of the president. People worry".
Mr. An went on to say, “Japan, which was once a semiconductor powerhouse in the 1990s and 2000s, was surpassed by Samsung Electronics, which made a bold investment because it did not make a timely investment decision, and its position in the semiconductor market has since collapsed.” , May also repeat the mistakes of Japan."