Under pressure, Lee gave up on extending his three-year term on the Samsung board, which is set to expire on Saturday. Although he’s keeping his title as vice chairman, it will be the board that drives overall management decisions, according to people familiar with the matter. Board Chairman Lee Sang-hoon and Samsung President Chung Hyun-ho -- who’s managing Samsung’s business task force and is known to be an ally of Lee’s -- are likely to take the lead in management in the absence of the heir, according to CEOScore’s Park and Samsung officials.
The latest chapter in the ongoing legal drama is kicking off at a sensitive time for the half-century-old tech behemoth. Samsung is confronting heightened uncertainties from a lingering trade war between the U.S. and China as well as a trade spat between South Korea and Japan, both of which complicate its market outlook and supply chain. A rising tide of new technology like fifth-generation mobile networks and artificial intelligence is also opening up new opportunities for eager Chinese rivals, who are spending lavishly to catch up to Samsung and its cash-cow businesses of semiconductor and display manufacturing.
Lee’s absence would dampen Samsung’s aggressiveness in pursuing massive deals for future technology, which are often struck among the top leaders between two companies, according to people familiar with the matter. While they claimed that Lee’s leadership is crucial for making decisions over the company’s long-term blueprint, Samsung has already announced $116 billion in investments for logic chips through 2030. It envisions a further $11 billion of spending for next-generation displays by 2025.
Behind the scenes, activist investor Elliott Management Corp. is closely watching the outcome of Lee’s legal wranglings, as it had an interest in the controversial 2015 merger at the root of the heir’s current travails. The New York-based hedge fund has filed an international arbitration claim that contends Korea unlawfully meddled in that merger and it now seeks compensation of more than $700 million.
This article was provided by Bloomberg News.