Samsung Electronics has officially appointed third-generation heir Lee Jae-yong as executive chairman, two months after he secured a pardon of his conviction for bribing a former president in a corruption scandal that toppled a previous South Korean government. [AP Photo]
Samsung's earnings report came a day after smaller chipmaking rival, SK Hynix, announced a 60% dropped in operating profit for the last quarter and said it would cut its investment next year by more than 50%, citing an "unprecedented deterioration" in market conditions.
Han Jin-man, executive vice president of Samsung's memory business, said during a conference call that the company doesn't have any plans for short-term production cuts and remains focused on the market's longer-term recovery.
Chipmakers like Samsung and SK Hynix are also navigating an intensifying U.S.-China technology standoff that some experts say could force the companies to significantly modify or reduce their Chinese operations over the next few years.
SK Hynix said this month that the U.S. Department of Commerce granted the company a one-year exemption from new U.S. export controls restricting the transfer of advanced semiconductor technology and chipmaking tools to China, allowing it to maintain memory chip production at its Chinese facilities without disruption.
However, SK Hynix's chief marketing officer, Kevin Noh, issued concern on Wednesday that the company might be forced to sell its manufacturing operations in China if the United States decides not to extend the company's exemption and intensifies the crackdown on technology exports to China. While Samsung has not publicly confirmed whether it has received a similar exemption from the U.S. requirements, a Biden administration official told the Associated Press earlier this month that it did.
The official, who was not authorized to comment and spoke on the condition of anonymity, said Samsung has received a license for the equipment needed to maintain existing facilities in China but not to export chips that are prohibited. About 40% of Samsung's NAND flash chips are reportedly produced from its factory in the Chinese city of Xi'an, accounting for around 10% of global capacity.
Lee had already been out of prison on parole for a year when President Yoon Suk Yeol pardoned him in August for the corruption conviction, an act of leniency that underscored the tech company's huge influence in the nation.
Lee was convicted in 2017 of bribing former President Park Geun-hye and her close confidante to win government support for a merger between two Samsung affiliates that tightened Lee's control over the corporate empire. Park and the confidante were also convicted in the scandal and enraged South Koreans staged massive protests for months demanding an end to the shady ties between business and politics. The demonstrations eventually led to Park's ouster from office.
He still faces a separate trial on charges of stock price manipulation and auditing violations related to the 2015 merger.