Sun, 29 Nov 2020

Lee Kun-hee, who transformed Samsung Electronics from a copycat South Korean appliance maker into the world's biggest producer of smartphones, televisions and memory chips, has died. He was 78.

Lee passed away on Sunday with his family by his side, the company said in a statement, without mentioning the cause of death. His family will hold a private funeral. He had surgery in 2014 after a heart attack and was treated for lung cancer in the late 1990s.

Lee, who told employees to "change everything except your wife and children" during his drive to foster innovation and challenge rivals such as Sony, was South Korea's richest person.

He had an estimated net worth of $20.7 billion, according to the Bloomberg Billionaires Index. Samsung, the biggest of South Korea's family-run industrial groups, known as chaebol, has been led by his only son since the heart attack.

"Chairman Lee was a true visionary who transformed Samsung into the world-leading innovator and industrial powerhouse from a local business," the company said.

"His legacy will be everlasting."

The reins are now set to pass to his only son Jay Y Lee, who's been the conglomerate's de facto leader since his father's hospitalization in 2014.

Lee is expected to eventually inherit a $300 billion company that's riding a Covid-era boom in online activity. Samsung, the maker of the Galaxy line of smartphones, also supplies semiconductors for Google's data centers and Apple's iPhone. It's the world's most advanced maker of displays for TVs, computers and mobile devices.

The younger Lee is currently grappling with two simultaneous legal disputes with South Korean prosecutors over allegations of bribery and corruption, which he has repeatedly denied.

Lee Kun-hee's heirs now face an estate tax of roughly $10 billion, and paying it may complicate the family's control of the Samsung conglomerate -- his beneficiaries would likely have to sell some assets to cover the tax - diluting their stake in Samsung.

South Korea's levy of 50% on estates of more than $2.6 million is the second-highest among countries in the Organisation for Economic Cooperation and Development, after Japan.

The Samsung empire includes 62 companies. Although the late Lee owned large chunks of some of the businesses - including 4.2% of Samsung Electronics - they are not big enough to afford control of the conglomerate. The family depends on informal ties to executives who run related companies, and a lot of that soft power may dissipate with Lee's death.

Global powerhouse

It was Lee Kun-Hee who built the company into the electronics powerhouse of today, becoming synonymous with the rise of South Korea on a global economic stage.

Named one of the world's 100 most influential people by Time magazine in 2005, Lee began overhauling Samsung Electronics after he saw the company's products gathering dust in a Los Angeles electronics store, according to , a 2010 biography by Lee Kyung-sik.

The Suwon, South Korea-based company had become known for cheap, low-quality electronics gear and was in the "second phase of cancer", sending out 6,000 people to fix products made by 30,000 employees, Lee said in 1993, according to the biography.

The company's makeover started in 1993 when Lee gathered top executives in Germany and laid out a plan, known as the Frankfurt Declaration, to transform Samsung from a second-tier television maker into an industry leader. The company's new mission: create high-quality products, even if it meant lower sales.

Samsung Electronics became the world's top maker of computer memory chips in 1992, the same year it became the first to develop 64-megabyte DRAM chips, according to the company.

Samsung's origins

Lee was born on 9 January 1942, in Daegu about 240 kilometers south of Seoul, and was raised in the nearby rural district of Uiryeong, according to the company.

In 1971, Lee Byung-chull chose his youngest son to be his successor, and in 1974, the company moved into semiconductors when it acquired a 50% stake in unprofitable Hankook Semiconductor. The business turned profitable in 1988, helped by dynamic random-access memory chips it produced.

Lee's cultural change eventually produced results. Samsung Electronics surpassed Tokyo-based Sony to become the top seller of flat-screen TVs in 2006, the same year its market value exceeded $100 billion.

Samsung became the biggest seller of all mobile phones in 2012, unseating Nokia Oyj, which had been the industry leader for more than a decade. Its success in smartphones then boosted profits at its component businesses, including memory chips, display and processors.

Presidential pardon

"In 10 years, the majority of products that represent Samsung may no longer exist," he said in a statement announcing his return.

Lee's son, Jay Y Lee, became vice chairman of Samsung Electronics in December 2012 and his daughter, Lee Boo-jin, is president of Hotel Shilla, a Samsung affiliate, raising concerns that the founding family would maintain its grip on the conglomerate at the expense of minority shareholders.

A special prosecutor had indicted the Samsung heir on charges of bribing a friend of former President Park Geun-hye in return for government backing for a merger that helped cement his control over Samsung while his father was hospitalised.

Source: News24

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