* Archive page for historical reference only. This profile is no longer being actively updated. See active page here *
Samsung has evolved into one of the two key players in the global consumer electronics industry, now challenging even arch-rival Apple as the leading pace-setter. It was already South Korea's biggest and most powerful business conglomerate. During the 1980s it was one of the five dominant "chaebol", or the family-run business groups, which provided the engine for Korea's massive economic growth during that decade. Ten years later, Asia's economic crisis and intense regulatory pressure from the Korean government caused rivals such as Daewoo and Hyundai to implode. But Samsung managed an orderly restructuring of its interests, becoming stronger than ever before. Though it retains interests in many other areas, the group's main business is electronics. It now ranks as the world's biggest technology company, eclipsing longer established competitors from Japan, Europe and North America. It is the leading manufacturer of memory chips, and the biggest producer of mobile phones, televisions and other digital appliances. That business has expanded dramatically in recent years, supported by aggressive marketing campaigns in North America and Western Europe.
Interbrand's Best Global Brands survey ranked Samsung as the world's #7 brand in 2016, with an estimated brand value of $51.8bn. Millward Brown's Brandz survey ranked Samsung much lower (#48), with an estimated value of $19.5bn. Both surveys use different measurement criteria.
See Consumer Electronics & Appliances Sector index for other companies
Samsung is to the 21st Century what Sony was in the late 20th. More than any other Korean company, Samsung has fully embraced Western corporate philosophy and thrown itself aggressively into North American and European markets, causing more established rivals - including Sony - to stumble dramatically. However the environment remains challenging. The company's domestic market continues to experience economic and political problems, a situation exacerbated in Samsung's case by the fact that many Koreans actively resent Samsung's commercial dominance at home even while they are proud of its international profile. In addition, supply still outweighs demand in sectors such as memory chips and other components. Countrymate LG learnt studiously from Samsung's success, and aimed to emulate or even surpass its mentor in the 2000s, but missteps (notably a critical delay following Samsung into the smartphone sector) have caused that competitive threat to disappear. Instead Samsung is locked in head-to-head competition with "frenemy" Apple, its biggest rival in the smartphone and tablet market, but ironically also a key customer of its components division.
Samsung is South Korea's single biggest business group by far. In an international context, it is generally regarded as an electronics company. However the electronics division forms only part of the empire, contributing around a third of combined revenues. Samsung Group also operates in financial services, pharmaceuticals, chemicals and heavy industry, and has interests in numerous other areas. However, to comply with government demands on all chaebol, the group dispensed with a central management structure in 2001, becoming instead a group of separate but interlinked companies without a single parent.
The flagship of the group is Samsung Electronics. It is notionally an independent company, although other Samsung companies and the founding family between them control a combined stake of at least 15%. Samsung Electronics in turn has shareholdings of different sizes in other group companies. In fact it is just the best known of more than 80 separate affiliated companies in Korea alone, 17 of them publicly listed in their own right. The combined group directly employs more than 370,000 people around the world, including around 210,000 working at Samsung Electronics. Many thousands more, especially in Korea, work for supplier companies who depend on Samsung for their business. Samsung Electronics accounts for around a fifth of the country's exports and also of its benchmark Kospi stock index. Its market capitalisation of around $220bn at the end of 2014 was roughly equivalent to that of the next eight largest Korean companies combined.
The group now operates across more than 100 countries. It supports its brand image with sponsorship of a wide range of sporting events from marathons in Eastern Europe to the Olympics and Asian Games. In its home country it is the single biggest sponsor of all sporting events, in both the professional and amateur sector. Pro teams include the Samsung Lions (baseball), Suwon Samsung Bluewings (soccer) and Seoul Samsung Thunders (basketball). It has been an Olympics sponsor since 1998. In 2005 the group became the lead sponsor of UK Premier League football team Chelsea FC of the UK. That arrangement has been extended several times.
Samsung Electronics operates across three divisions of consumer electronics (such as TVs and DVD recorders, and also digital appliances including refrigerators and washing machines), IT & mobile communications (mobile phones, but also notebook PCs), and what it calls device solutions, comprising LCD screens & other display panels and semiconductors. The group has adopted digital convergence as its guiding philosophy and many of its products, from computers and TVs to air conditioners, fridges and washing machines, are designed to be linked via a central broadband network which can be accessed by customers over the internet.
Samsung is the #1 manufacturer worldwide of TV sets. It is the market leader in every global region (except Japan, where it doesn't sell TVs). Combined global share by value hit a new high of 29.2% by the end of 2014 (IHS Display Search figures), almost twice the share of second-placed LG and more than three times that of struggling Sony. For 2Q 2016, IHS estimated global share by shipments of 22.2%, well ahead of LG (13.1%) and Sony (5.6%). It is the market leader in each segment, including LCD, 3D, and now plasma as well. It is also #2 in DVD players, and is becoming one of the leaders in digital still cameras as well. In 2010, it was the global #4, according to researcher IDC, and #5 in the US. It still produces laptop computers under its own name, but announced a deal in 2016 to sell its computer printer business to rival HP for $1.05bn. Under the terms of the deal, HP will continue to supply devices to Samsung to re-market under its own name.
Samsung's digital appliances unit makes a wide variety of home appliances, and has almost half of the Korean market. It is the #1 in air conditioners, refrigerators, microwave ovens, washing machines and vacuum cleaners. An increasing number of these appliances are now being sold in international markets, trading off the soaring reputation of the company's phones and TVs. In 2011, it claimed 13.5% share in the global refrigerator market, and was the market leader in side-by-side fridge freezers. In 2016, the group raised the stakes in this division with the acquisition of US manufacturer Dacor, a maker of luxury kitchen appliances, for an undisclosed sum.
Combined sales were KWon 45.11 trillion ($41.4bn) in 2017, more or less unchanged year-on-year, with operating profit of KWon 1.65tn ($1.5bn).
The key sector for Samsung is of course mobile devices. Samsung and LG between them dominate the Korean mobile handset market, which has remained more or less closed to foreign competitors because of government controls on local wireless technology. The group has also built up an even more commanding presence in the global market, steadily overtaking a string of better-establish rival companies. It became the #2 for the first time in 2007 (overtaking Motorola). Then, in 2009, in an overall market that reported a sharp decline in performance, Samsung's own unit sales continued to grow, climbing by 16% to 227m worldwide, equivalent to just over 20% market share. That was just over half the number sold by leader Nokia, but almost twice what was then the new #3 in the sector, LG. The launch of the Galaxy range of smartphones allowed Samsung to strengthen its position for 2010, breaking through the 280m level for the year. The group consolidated its position during 2011 as a result of Nokia's decline, growing total shipments to more than 329m handsets. That was equivalent to 21.3% worldwide market share, less than six percentage points behind the Finnish company. In the final quarter alone, Samsung sold almost 98m devices.
By that point, Samsung had become the main rival to Apple in the fast-expanding high-end smartphone market. The two companies became embroiled in a bitter dispute over alleged patent infringements, despite the fact that Samsung was also (and still is) one of Apple's main suppliers of components for the iPhone. Apple accused Samsung of copying the look and feel of its iPhone and iPad devices for the first Galaxy and Galaxy Tab models, and attempted to block sales in several global markets. Samsung responded with injunctions against the iPhone4S in Italy and Spain.
Despite these battles, sales of Galaxy continued to soar, tripling during 2011. As a result, for the year as a whole it edged ahead of iPhone to become the world's top-selling smartphone, with unit sales of 94.0m devices (to iPhone's 93.2m). In the first quarter of 2012, it overtook Nokia to become the global #1 in all mobile phones for the first time. A major breakthrough was the launch of the much-admired Galaxy S3 handset in Spring 2012, which proved a huge hit with customers. For the full-year 2012, Samsung sold around 406m mobile phones, including 216m smartphones, giving it 23% share of the total handset market and 30% of the smartphone segment. For 1Q 2013, Samsung's smartphone share rose to a new high of 32.7%, almost twice Apple on 17.3%.
A new Galaxy S4 handset launched in Spring 2013 to widespread acclaim, further increasing the competitive pressure on Apple. However, Chinese competitors had begun to erode Samsung's performance by the end of the year. For the whole of 2013, Samsung's smartphone share had reduced to 31.3%, and volumes of almost 314m units. Yet another new model, the Galaxy S5, was introduced in Spring 2014, with several minor changes including a fingerprint sensor (similar to that already offered by iPhone), faster processor and better camera. However, the new model was considered disappointing compared to its predecessors and it did nothing to slow Samsung's share erosion at the expense of Chinese rivals. The launch of iPhone 6, and Apple's fullscale launch into China at the end of 2014, prompted another big dent.
The group has continued to issue a new flagship S-series Galaxy smartphone each year. Disappointing performance from the S5 and S6 (in 2015) was offset by a significant improvement in sales for the S7, unveiled in 2016. Well-received by the media and by customers, it got off to a strong start following its launch. However a few months later, the higher-spec Note7 tablet plunged the company into an unexpected crisis after faulty batteries caused the devices to catch fire without warning. All initial supplies were withdrawn, but the replacement device suffered exactly the same problems, forcing Samsung to abandon the model altogether. The Galaxy S series is accompanied by lower spec Galaxy A and J series devices. The Galaxy S8 handset launched in Spring 2017, also to a strong critical reception.
Competition between the two brands remains intense. Samsung's smartphone shipments peaked in 2015 at 325m units, equivalent to 22.7% share, more than six full points ahead of Apple. Since then, the market as a whole has slowed dramatically, and Samsung's shipments declined in 2016 to 311m smartphones, or 21.2% share. That was still more than six percentage points ahead of Apple. See latest figures here. In the tablet sector, Samsung's Note retains a strong second place, despite the Note7 debacle. with 15.2% global share for full year 2016, according to IDC. However it still lags well behind Apple (on 24.4%). Amazon was #3 with 6.9%.
Another key emerging area for the group is VR. Its range of Gear digital accessories (which also includes smartwatches and fitness devices) is led by the Gear VR headset, based on Facebook's Oculus technology. It is far and away the most widely owned VR headset worldwide, with over 70% share by shipment volumes in 2016. Researcher SuperData estimated sales of 4.5m units that year, well ahead of PlayStation VR (750k units), and the higher-priced HTC Vive (420k units) and Oculus Rift (250k units).
Combined sales were KWon 106.7tn ($97.9bn) in 2017, up 6%, with operating profit of KWon 11.8tn ($10.8bn).
Device Solutions combines the group's various components operations. The group overtook Intel for the first time in 2017 to become global #1 in semiconductors. It was already the clear #1 in memory chips, including those used in mobile phones and portable music players including the iPod. The company operates manufacturing centres in Mexico, the UK, Brazil, Malaysia and China, and has offices in more than 57 countries. In 2008, it launched a hostile $5.8bn takeover of SanDisk, the US company which is is the world's largest supplier of flash storage card products. However it withdrew that offer a few months later in the wake of the deepening economic downturn. In 2003, Samsung agreed a joint venture with Sony to combine both companies' TV display manufacturing businesses, under the name S-LCD, now the global leader in large-screen LCD panels for monitors and flatscreen TVs, ahead of a similar joint venture between Philips and LG. However, the venture soon became a financial burden to Sony as it fell behind its partner in market share. Samsung bought out Sony at the end of 2011 for around $940m, and spun out the business as a separate company in 2012 under the name Samsung Display.
Combined sales were KWon 108.2 trillion ($99.3bn) in 2017, up 38% year-on-year, with operating profit that more than doubled to KWon 40.3tn ($37.0bn). Individual component categories like semiconductors in general and flash memory in particular did even better, up 45% and 59% respectively. Components now account for three-quarters of the whole group's total operating profit.
Towards the end of 2016, Samsung launched a new push into the auto components business with a rare deal to purchase audio specialist Harman International Industries for $8bn. The Korean giant has tended in the past to develop technology in-house rather than acquire it. Though it's widely known for home audio speaker systems under the Harman Kardon, JBL and Infinity brands, around two-thirds of Harman's revenues come from in-car entertainment and safety camera systems for major auto manufacturers. Customers include Toyota, Volkswagen Group, Fiat Chrysler, Mercedes-Benz and BMW. Harman will continue to operate as a separate unit under the Samsung umbrella. Revenue contribution for 2017 was KWon 7.1tn ($6.5bn).
Samsung Electronics' financial performance peaked in 2013 on the back of soaring demand for its Galaxy smartphones. Combined revenues that year rose 14% to KWon 228.7 trillion ($209bn), while net income was KWon 30.5tn ($27.9bn). However intense competition from low-cost Chinese manufacturers on one side and Apple on the other dented both sales and profits over the next two years.
There was finally a turnaround in 2016, despite the unexpected problems surrounding the Note 7 device recall, and those associated costs. Revenues edged up 0.6% for the first time since 2013 to KWon 201.87tn ($173.5bn) while net income jumped 19% to KWon 22.73tn ($19.5bn).
Performance for 2017 was even better. Revenues powered up by 19% to a record KWon 239.58tn ($212bn), while net income soared by 87% to KWon 42.19tn ($37bn). Virtually all of the growth was generated by spectacular performance in the Device Solutions components division, which overtook mobile as Samsung's biggest business by sales.
Affiliated electronics businesses include Samsung SDI, which is the world's largest colour picture tube manufacturer in the world and also makes rechargeable battery cells (total sales of around $4.9bn); and component manufacturer Samsung Electro-Mechanics, Korea's biggest such company, with sales of around $6.0bn. Samsung Corning (sales of $4.2bn) is a joint venture with US business Corning. Originally created to make picture tube glass, it now makes glass components for LCD displays for digital products. Samsung SDS ($4.3bn) is Korea's leading information services company, providing IT services, business consulting, software and systems development for major corporations. It is partnered by IP services provider Samsung Networks, which offers internet systems mainly for corporate customers. Samsung Media makes a huge variety of IT consumables from toner to CDRs.
Almost as big as the group's electronics division is its financial services and insurance arm. Samsung Life insurance is one of the world's largest life insurers, and Korea's #1. It has total assets in excess of $160bn, and premium revenues of over $20bn a year. Its IPO in April 2010 was the biggest to-date in Korea, raising some $4.4bn. Samsung Fire & Marine Insurance is Korea's largest non-life insurance company with more than 30% market share, and revenues of around $16bn. Samsung Card is the country's second largest credit company with over 8m customers and revenues of $3.0bn. It issues cards on behalf of VISA, MasterCard and American Express. Other financial businesses include investment bank and wealth manager Samsung Securities and investment manager Samsung Investment Trust.
Samsung Heavy Industries is a leading construction and shipbuilding company, and by far the biggest manufacturer of ships equipped to carry liquefied natural gas (LNG), a rapidly expanding sector. Sales were over $13.2bn in 2012. Samsung Techwin, with sales of $2.7bn, makes security and defense equipment and power systems. The group has a number of chemicals industry subsidiaries, including separate joint ventures with Total of France and BP. It also manages a huge portfolio of other diversified businesses across numerous sectors, not least a minority stake in Renault Samsung Motors. Cheil Communications is Korea's largest marketing services group. Samsung C&T Corporation is Korea's largest trading business (revenues of $16.9bn in 2012), with interests in general trading, construction, energy and industrial manufacturing. The company operates a number of shopping complexes and department stores, as well as the Esses family clothing brand and Astra golf apparel range.
Cheil Industries is the current incarnation of what was originally the group's parent business, a leading textile manufacturer with interests in advanced chemicals and fashion. Revenues are over $5bn. Among its various brands is the Italian company Derercuny, which is building an international reputation as a high-end designer fashion label. In Korea its brands include Lansmere men's suits, Bean Pole, Rogatis and Galaxy. Shilla Hotels is the country's leading hotel and resort operator. S1 is a leading security and crime prevention business. Samsung Lions are one of the country's top professional baseball teams. Samsung Hospitals operates four general hospitals and a bioscience research facility. The group also runs a variety of charitable or research foundations, specialising in arts, culture and the economy.
One of the group's fastest-expanding sidelines is in pharmaceutical development. Samsung Bioepis makes biologic copies - or "biosimilars" - of leading pharmaceuticals approaching expiry. Products include versions of Enbrel, Remicade and Humira. Samsung has commercial marketing partnerships with Biogen in Europe and with Merck & Co in most other markets. Its most high-profile such drug is its copy of Johnson & Johnson's Remicade drug. This launched in Europe in 2016 as Flixabi and is set to debut in the US in Oct 2017 under the name Renflexis, in a partnership with Merck & Co. J&J has issued a lawsuit to block the US launch, alleging copyright infringement.
Although there is no formal parent entity to the group as a whole, its de facto core is provided by Samsung Everland, the main business of which is to develop golf courses and resorts in Korea, and which runs Everland, the world's 4th largest theme park. It is also wholly owned by the founding Lee family, and in turn owns shareholdings in virtually all the other main businesses within the group.
The group declared consolidated revenues for 2011 of KWon 274,276bn (approx $251bn), and net income of KWon 20,316bn ($18.6bn). More recent figures are not disclosed, and since the arrest of Lee Jae-Yong (see below), the group has taken steps to play down the connections between its various companies in order to rehabilitate its battered public image in South Korea.
Lee Kun-Hee is son of the original founder of the Samsung empire. He was reappointed as chairman in March 2010, a little less than two years after he resigned from an executive role following conviction for tax evasion. His position is nominally a non-executive one, although in reality he has final say on most aspects of the company's business. The reappointment came a few months after he received a presidential pardon to allow him to rejoin Korea's business community. Turning 75 in 2017, he is undoubtedly the country's most powerful and influential businessman, as well as the wealthiest with a fortune estimated at $11.5bn. However he suffered a heart attack in 2014, and remains a semi-comatose invalid.
The heir apparent to the Samsung empire is Kun-Hee's son Lee Jae-Yong (known as Jay Lee or "Jay Y"), 48 in 2017. He too resigned his position as group vice chairman and chief customer officer in 2008 for a less high-profile position, before quietly rejoining the mainstream in December 2009 as chief operating officer of Samsung Electronics. He was reappointed as group vice chairman in 2012. He was dragged unwillingly into the spotlight in 2016 in connection with corruption allegations against the country's then-President Park Geon-hye. It was discovered that the 2015 merger of two Samsung group companies had been rubber-stamped President Park, significantly increasing the Lee family's direct shareholding in Samsung Electronics. At around the same time, the group was found to have made an unusual $37m payment to a foundation run by President Park's unofficial advisor and confidante. Jay Lee denies any connection, but prosecutors filed charges against him for bribery, embezzlement and perjury. He was eventually arrested in early 2017. Found guilty later the same year, he was sentenced to five years in prison. Just under a year later, he was released from prison after an appeal court reduced his sentence and suspended it for four years.
Neither Kun-Hee or Jae-Yong serve on the board of directors of its biggest business Samsung Electronics, preserving the appearance of its independence. In reality, however, their influence remains enormous. Lee Kun-Hee's daughters Lee Boo Jin and Lee Seo Hyun also have holdings in core company Cheil Industries.
Each of the chaebol has its patriarch, and Samsung's was Byung-Chull Lee, who established the company in 1938, trading dried fish with China and making noodles for domestic consumption. He chose the name Samsung because it means "three stars" and these stars resemble the Korean characters that mean "Let it be large, strong, and last forever". The company grew and diversified, despite the disruption of the Korean war. In 1953, different company subsidiaries began importing manufactured goods from the West and making domestic fabrics. Most important of all, Lee set up Cheil Sugar Company, then the country's only sugar refinery. The success of this venture helped set a path for future businesses. Over the next decade, the expanding group set up a series of other companies to make domestic substitutes for goods and commodities traditionally imported by Korea.
Samsung also moved into financial services, establishing or acquiring affiliate businesses to support its trading operations. These included Ankuk Fire & Marine Insurance (acquired 1958, now Samsung Fire & Marine Insurance) and DongBang Life Insurance (acquired 1963, now Samsung Life Insurance). In 1962, the group acquired Saehan Paper and merged it with its own subsidiary to form Chonju Paper Manufacturing (later sold to become Hansol Paper). The group also acquired real estate, department stores and newspaper interests.
Most important of all was Samsung Electronics, established in 1969 to replicate imported electronic goods for the domestic market. To support and feed this growing division, the group formed partnership ventures with other, mostly Japanese, electronics companies. Samsung-Sanyo Electronics and Samsung-NEC were both formed at the end of the decade to absorb skills for making monitors and display screens. Soon Samsung was re-exporting televisions, and later VCRs and microwaves into Western markets. Initially these were sold as private label products to American department stores, but Samsung began branding its products from the late 1970s.
The group expanded rapidly during that decade, with the financial support of the Korean government. Like its fellow chaebol, Samsung moved into heavy industry. Samsung Petrochemical Co and Samsung Heavy Industries Company were both formed in 1974. Three years later the group acquired Daesung Heavy Industry Company and renamed it Samsung Ship-Building Company. Samsung Precision Company (now Samsung Aerospace Industries) was established the same year. The group became a key player in the nascent semiconductor industry during the 1980s. During that decade the group threw itself into electronic manufacturing, establishing Samsung Data Systems (now Samsung SDS) in 1985, Samsung Economic Research Institute in 1986, and the Samsung Advanced Institute of Technology (SAIT) in 1987. By the end of the decade the group had expanded into electronics, semiconductors, high polymer chemicals, genetic engineering, and the aerospace industry.
In 1988, Byung Chull Lee died, and was succeeded by his son Kun Hee Lee. He presided over a huge expansion in the group's electronics business. By 1990, Samsung was the world's leading manufacturer of DRAM memory chips. Like the other chaebol, Samsung expanded into every conceivable line of business during the 1980s and early 1990s, from hotel management to insurance, from credit cards to commercial and passenger vehicles. However electronics remained its core business line. In 1994, core trading entity Samsung Corporation became the first Korean company to export more than $10bn worth of goods (this increased to $16bn by 1997). The same year the group was ranked as the world's 14th largest corporation by Fortune Magazine. In 1996, the group bought a 49% stake in PC manufacturer AST, taking up the rest of the stock the following year (but selling out in 1999). Most important of all, while other chaebol were resting on their laurels, chairman Lee began aggressively restructuring his empire to emulate more established competitors in Japan, the US and Europe.
Perhaps Kun Hee Lee's only serious corporate mistake was to get involved in car manufacturing. He established Samsung Motors in 1995 in order to compete with Daewoo and Hyundai. The timing was disastrous. The economic crash in Asia in 1998 left Samsung Motors with huge debt and manufacturing facilities, but no domestic market. Following the call to restructure, Samsung was one of the first of the chaebol to voluntarily streamline its business in an attempt to save itself. During 1998, the group sold its heavy construction division to Volvo for $572m, sold its 45% share of Hewlett Packard Korea back to Hewlett Packard, and merged petrochemical operation Samsung General Chemicals with Hyundai Petrochemical Co. Staff numbers were slashed falling from 267,000 in 1997 to 161,000 within two years. The group also attempted to offload its effectively bankrupt passenger car division to fellow chaebol Daewoo in exchange for the latter's electronics division. But Daewoo - itself on the verge of collapse - pulled out of the deal at the last minute because it couldn't afford Samsung Motors' debt.
Instead, the group opened discreet negotiations with French carmaker Renault. The cat was let out of the bag by a Korean newspaper in late 1999, although both sides claimed they were only talking about trucks. However by March 2000, it was clear that they were discussing a full sale of the Samsung Motors division. The fit with Renault was very neat - Samsung Motors was originally set up to launch a car based on the Nissan Maxima platform, now controlled by Renault. The two sides settled a deal in April 2000. Renault paid around $560m for a 70% stake in Samsung Motors, becoming the first foreign car company to break into the hitherto protected South Korean market. The Samsung group kept a 20% stake, while creditors retained 10%. The company continued production of the existing Samsung vehicle, and has gradually introduced a range of Renault- and Nissan-based vehicles adapted to the Korean market.
Elsewhere within the group, Samsung made strong progress, especially in its electronics division. Shifting strategy away from low-priced bulk copies of other manufacturers' products, Samsung set up design offices in the US and Europe, doubling the size of its team, with a brief to focus more on the high end of the market. (Between 2001 and 2005 alone the company picked up 19 prizes at the Industrial Design Society of America's prestigious Design Excellence Awards, more than any other manufacturer). More importantly perhaps, the group instituted strict quality control procedures. To provide a compelling incentive to employees to maintain standards, all faulty products were put on public display in the company's headquarters. During 1999, Dell Computer and Apple each agreed five year deals to purchase several billion dollars' worth of LCD displays from Samsung, and acquired substantial quantities of bonds, convertible to Samsung shares. The Dell deal was later extended to cover $16bn of other components including chips and disk drives. The group also launched a massive marketing campaign designed to boost general awareness of its products. Samsung spent almost $200m on global branding in 40 countries, including core sponsorship of the Olympics since 1998, as well as an association with blockbuster sci-fi movie series The Matrix between 2000 and 2002. More recently it signed a non-exclusive product placement agreement with New Line Cinema (a division of Time Warner) to supply electronics products for use in new movies.
However Samsung's soaring success, and the methods by which the Lee family maintained their hold on the business, also attracted the attention of Korean regulators. The group was finally punished for alleged past misuse of company funds in 2003 when senior executives including chairman Kun Hee Lee were ordered to pay a total of nearly Won100bn ($75.8m) of compensation. A new row erupted towards the end of the year when Lee was charged with illegally transferring shares in the group to his son Jae Yong Lee in order to avoid future inheritance tax. In 2005 another scandal erupted following revelations that the former publisher of a newspaper part-owned by Samsung had been used as a courier to deliver bribes totalling $10bn to presidential candidates in Korea’s 1997 election campaign. Detailed information regarding the bribes was collected on secret tape-recordings apparently made with the complicity of a former government intelligence official. The Lee family was said to be directly implicated in the scheme, and even Korean President Moo-Hyun Roh was touched by the scandal. (President Roh subsequently appointed the alleged courier as Korea's ambassador to the US, a move which at the very least threatened to leave him open to accusations of poor judgment). After several months of investigation, the Seoul District Prosecutors Office cleared Samsung of any wrong-doing at the end of 2005, but indicted the journalists who made the recordings.
Adding to the group's problems, Samsung Electronics admitted in the US in October 2005 that it had taken part in a plot to fix international prices of DRAM memory chips between 1998 and 2002. It agreed to pay fines of $300m, the second largest criminal antitrust fine ever levied by the US Justice Department, and agreed to assist with further investigations. Hynix Semiconductor and Infineon were also fined in connection with the conspiracy. Shortly afterwards a new investigation was launched by South Korean regulators after rival semiconductor manufacturers alleged that a deal by Samsung to supply Apple with flash memory chips for its iPod Nano MP3 players had been agreed at unfairly low prices. In a more tragic side to the Samsung saga, Mr Lee’s youngest daughter, just 26 years old, committed suicide in her New York apartment towards the end of the year.
Another legal battle came to resolution in early 2008 when Samsung was ordered to repay debts of $1.7bn still outstanding after the sale of its failed automobile unit to Renault. Rather than sell its remaining minority stake in what is now Renault Samsung Motors when control was sold to Renault, the group offered creditors shares in other group companies such as insurance subsidiary Samsung Life instead. The group was at the time intending to float that business, but those plans were later cancelled. A lawsuit ensued in 2006, and in January 2008, a Korean court sided with the creditors, ordering Samsung to pay the debts in cash.
In 2008, Jae Yong Lee was summoned for questioning by prosecutors over allegations that Samsung had maintained slush funds for lobbying politicians and government officials, and had also arranged illegal bond trades between family members to help them retain management control of the group. It was the first time that a member of the family had been officially questioned in this case. In April, Kun Hee Lee was charged by government prosecutors with evading around $115m in taxes payable on Samsung shares inherited from his father, and with breach of fiduciary duty in relation to the bond trades. He was found guilty and awarded a three-year suspended jail sentence. He resigned from his executive role in the group a few days later, along with the other executives implicated in the affair. No charges were brought over the bribery fund. Mr Lee's exile didn't last long. He received a presidential pardon in 2009 and was asked to head up a committee to bid for the Winter Olympics. In March 2010 he rejoined Samsung as group chairman.
Last full revision 4th April 2017
* Archive page for historical reference only. This profile is no longer being actively updated. See active page here *
All rights reserved © Mind Advertising Ltd 1998-2019