Lee Jae-Yong, Chairman of Samsung Electronics./Courtesy of News1

The Supreme Court ruling on Lee Jae-Yong, chairman of Samsung Electronics, who is facing charges of unfair mergers and accounting fraud, is just one day away. There is widespread attention on whether he can break free from the judicial shackles that have tied him up for 10 years and inject new energy into Samsung Electronics, which is in crisis due to poor performance.

In the business community, there are positive forecasts that after the owner’s judicial risk is resolved, Samsung Electronics will be able to focus on aggressive mergers and acquisitions (M&A) and new business investments. However, considering that the semiconductor (institutional sector), which is the source of Samsung Electronics' crisis, has seen a decline in M&A and new business investments since Lee took office, there are also observations that there will be no special changes.

According to the business community on the 16th, the Supreme Court is set to hold a hearing for Lee's appeal at 11:15 a.m. on the 17th. This will be the first trial in nearly 4 years and 10 months since the case began, and just over 5 months since the second trial ruling. Lee was indicted on charges of involvement in inappropriate transactions, stock price manipulation, and accounting fraud led by the internal Future Strategy Office with the intention of succeeding management rights at minimal expense and strengthening his dominance during the merger of Cheil Industries and Samsung C&T in 2015.

After being acquitted of all 19 charges in the first trial last February, the Seoul High Court, which handled the appeals trial this February, also ruled not guilty on all counts; however, the prosecution appealed after going through the Supreme Court appeals committee later that month. Since the 2016 National Assembly corruption scandal, Lee has been shuttling in and out of the courtroom for 10 years, suffering from judicial risk.

A business insider familiar with Samsung noted, "After Lee took the chair position, there was no proper period for showing normal management activities due to legal battles, making it difficult to perform as a legitimate manager. It is hard to find a case in any advanced country where the leader of a large corporation appeared in court dozens of times a year. It was a situation where it was physically and psychologically difficult to function properly."

Since the not guilty verdict in February, Lee has been actively engaging in external activities to imprint his image as the head of Samsung. The day after the acquittal, he met with Sam Altman, CEO of OpenAI, and Masayoshi Son, chairman of SoftBank Group, to discuss the artificial intelligence (AI) business, and recently attended the billionaire social club "Sun Valley Conference" to seek future business opportunities.

However, there are still many tasks that Lee must tackle. In the semiconductor institutional sector, which is at the core of Samsung, it has been operated with a structure that has hardly changed for 20 years, and it is necessary to devise a medium- to long-term strategic plan. While Samsung Electronics' existing strategy focused on R&D to generate revenue through overwhelming technological differences, there are indications that in the era of AI semiconductors, semiconductor processes will become more complex, requiring partnerships with other companies.

While global semiconductor corporations like Intel and Qualcomm actively expand their business areas and strengthen their R&D capabilities through M&A, Samsung Electronics' semiconductor institutional sector has shown a passive attitude toward M&A. Recently, Samsung announced the acquisition of Plact, a German air conditioning company, and the MX division purchased a digital healthcare firm, Zales. However, there are still no M&A news in the semiconductor field.

If Lee is completely freed from judicial risk, there is a possibility that he may propose a significant organizational overhaul along with a medium- to long-term roadmap, positioning himself as "a new Samsung" like his late father, Lee Kun-Hee. In this case, there are expectations that he will actively respond to the rapidly changing AI trends through leadership reforms criticized as 'the return of old boys' and 'revolving door appointments' during last year's routine personnel changes, as well as the recruitment of external personnel well-versed in the global market.

An executive at Samsung Electronics stated, "Since the verdict has not yet been issued, it is difficult to assert how things will change. However, it is true that resolving the judicial risk is positive for leadership issues," adding, "The significant reforms and active M&A that are expected inside and outside Samsung will be judged by the management, considering market conditions and needs."

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