Samsung Electronics Vice Chairman’s Move Is Drawing Attention

Samsung Electronics vice chairman Lee Jae-yong visited Europe and Canada in March this year. It was his first official schedule set up after he was granted stay of execution in the previous month. On May 22, Samsung Electronics announced that it would set up an international network of artificial intelligence (AI) research centers. Experts pointed out that the plan reflected Samsung Electronics’ strategy to transform itself from a hardware manufacturer to a platform company and develop new business models based on Bixby and Samsung Pay.

They also pointed out that the vice chairman is currently setting a new direction for the entire Samsung Group, in a fashion that his father, Samsung Group chairman Lee Kun-hee, did in April 2011. At that time, the chairman moved his office from Seungjiwon in Hannam-dong to the Samsung Building in Seocho-dong, Seoul in one year after his return to the group from a special prosecutor investigation. “It can be seen that the clog in the decision-making process of the group is being removed after the vice chairman’s return,” said an industry insider.

Since his return, various important decisions have been made regarding different challenging tasks such as corporate governance reform and future growth driver preparation. Those in the business community are predicting that some tangible results are about to come with regard to Samsung’s new business models in that the group has signed no M&A deal for almost two years and M&A is led by a business group owner in most cases. Samsung Electronics’ acquisition of Harman International for US$8 billion in 2016 was carried out immediately after the vice chairman became a registered director. In this context, the plan for AI network establishment may be the starting point of another huge M&A deal. According to the plan, Samsung is going to increase the number of its AI researchers and engineers by 1,000 until 2020 while concentrating on AI R&D in South Korea, the United States, Britain, Russia and Canada.

The vice chairman stayed in Japan and China for a week early this month, meeting with a number of business moguls. Especially in Shenzhen, China, he met with BYD Chairman Wang Chuanfu, Huawei Chairman Ren Zhengfei, and Xiaomi Chairman Lei Jun. “It is very meaningful that the vice chairman visited Shenzhen, the Silicon Valley of China,” said a local corporate executive, adding, “It seems that he visited multiple startups and talked chip supply-related cooperation over with local companies.”

The Samsung Group itself is also saying that its business portfolio may be adjusted sooner or later. “It cannot be denied that things have become clearer since the vice chairman’s return and there may be some movein the near future in that the vice chairman is not against M&A-based technology introduction at all and Samsung is currently concentrating on software,” a Samsung executive mentioned.

Still, the group is denying that the vice chairman is assuming an increasingly active role in its management. This seems to be based on its determination that adverse situations still remain as they are concerning the recent dividend payment error of Samsung Securities, Samsung BioLogics’ accounting fraud allegations, government pressure regarding corporate governance reform, etc.