Speculation is growing that Samsung, SK, and LG Groups will partially reorganize their operations.
In the securities industry, there is a growing call for a division of Samsung Electronics as financial authorities are moving to apply the “30 percent cap rule” to the electronics giant.
SK Group is considering dividing SK Telecom and changing the names of some of its affiliates.
LG Group is also considering spinning off LG Chem's battery business division.
Samsung Electronics is in the spotlight as rumors have been circulating since the end of 2019 that the company may spin off its foundry business department. Korea Exchange is considering applying the 30 percent cap rule early to Samsung Electronics as its market capitalization has approached 30 percent of the aggregate market value of the KOSPI 200 companies.
Foundry industry experts say that Samsung’s foundry clients may be reluctant to outsource chip production to Samsung Electronics as the company produces not only memory and system semiconductors but also smartphones and other devices. In view of this, Samsung Electronics separated its foundry division from the system LSI division, but the market reaction was not positive.
Considering various circumstances, the possibility of Samsung Electronics’ division is not high. The company reviewed a governance overhaul, including a transition to a holding company structure, in 2016, but gave it up in about six months. The company is still negative about changing its operations. In addition, vice chairman Lee Jae-yong is still on trial in connection with the Choi Soon-sil scandal.
However, market watchers do not rule out the possibility of Samsung Group promoting a governance reform involving financial affiliates.
SK Group is more likely to change the governance structure of its affiliates. Earlier this year, SK Telecom president Park Jung-ho mentioned the possibility of changing the company’s name and listing its subsidiaries. SK Innovation president Kim Jun also said that some affiliates of the group might change their names.
Market watchers say that the group may make SK Telecom an intermediate holding company because it needs to utilize SK Hynix, which has grown into a group's flagship company, by upgrading its status from a sub-subsidiary to a subsidiary. The group also needs to address its equity structure issue arising from a divorce lawsuit that was filed by group chairman Chey Tae-won’s wife Roh So-young at the end of last year.
LG Group is also likely to promote business reorganization. It is expected to spin off LG Chem’s electric vehicle battery business. As the battery business requires large-scale investments, separating the battery division and listing it is a good option as it will facilitate raising funds. Some measures are being discussed to merge the battery business department with other subsidiaries' businesses including automotive electronics.
LG Electronics took over Austrian automotive lighting company ZKW while LG Chem acquired automotive adhesive company UNISIL. LG Uplus acquired CJ Hello and renamed it LG Hello Vision. The group has disposed of non-core businesses such as fuel cell and electronic payment businesses through liquidation or sell-off.