Publisher Note: Samsung Is Struggling Alone | BusinessKorea

Monday, November 20, 2017

The imprisonment of Samsung Electronics vice chairman Lee Jae-yong is leading the Korean IT giant to a management vacuum that is likely to continue for the time being.
The imprisonment of Samsung Electronics vice chairman Lee Jae-yong is leading the Korean IT giant to a management vacuum that is likely to continue for the time being.
SEOUL,KOREA
28 August 2017 - 5:00pm
Jack H. Park

Samsung Electronics is trying to maintain its lead in the global semiconductor, TV, smartphone industries and so on while the Chinese government is providing full support for Chinese semiconductor manufacturers and Japanese electronics manufacturers are striving to regain their past glory. During the course, things are getting worse for Samsung in South Korea as the imprisonment of its leader is leading to a management vacuum that is likely to continue for the time being.

Recently, Toshiba made a controversial decision by selecting the Western Digital consortium as the preferred bidder for the sale of Toshiba Memory Corporation. Previously, the other consortium including SK Hynix was the preferred bidder. The worrisome part is why Toshiba changed from the latter to the former.

Earlier, Toshiba and Western Digital had some conflict over the sale of the corporation. Their change in stance is possibly because South Korean companies’ presence in the global semiconductor industry is likely to further increase once SK Hynix acquires the corporation, and Toshiba and Western Digital are planning to overtake Samsung Electronics by working with each other. In the second quarter of this year, Samsung Electronics accounted for 35.6% of the global NAND flash market whereas Toshiba and Western Digital came in second and third with 17.5% each.

Meanwhile, Chinese and Taiwanese companies are making a substantial investment in the semiconductor and display industries and trying to beat Samsung Electronics by taking over Japanese electronics manufacturers. For example, Hon Hai Precision Industry, which acquired Sharp last year, said in December last year that it would no longer supply LCDs for TVs to Samsung Electronics.

Foxconn, a subsidiary of Hon Hai Precision Industry, said last month that it would invest approximately 11 trillion won (US$10 billion) in Wisconsin in the United States to build an LCD manufacturing plant. Industry experts say the plan is to catch up with Samsung Electronics. Foxconn is looking to take over Japan Display, too.

With Samsung Electronics facing mounting challenges abroad as mentioned above, uncertainties about the future of the company are on the rise inside the nation as well due to the extended absence of vice chairman Lee Jae-yong. The future of the South Korean economy as a whole, which relies much on Samsung, is increasingly at stake under the circumstances.

The prosecution and even the judiciary, which read the countenance of the new regime, are fueling the anti-Samsung and anti-chaebol sentiment nowadays by jumping on the bandwagon of the public opinion that is not always justice. South Korea is making a serious mistake by tearing down the hard-earned brand value and competitiveness of Samsung.

Purposeful political pressure from without and utilization of public opinion to drive unfriendly the legal trial of former President Park Geun-hye has made the head of the global corporation representative of the country fall a victim. However, South Korea is in no position to let economy fall victim to politics.

 

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