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[Newsmaker] August critical month for Samsung and its leader

Lee Jae-yong (Yonhap)
Lee Jae-yong (Yonhap)

Expectations are high that Samsung Electronics, which for months deliberated on a new, $17 billion US investment plan, may finally be ready to make an official announcement in August.

According to industry sources on Friday, Samsung is accelerating the internal process for concluding its plan to construct a new chip fabrication line for foundry in the US.

Some news reports said Thursday that the City of Austin in Texas, where the South Korean firm already has a chip plant up and running, is the most likely candidate.

The Travis County Commissioners Court, the authority of Austin, has begun negotiations with Samsung Austin Semiconductor on tax incentives for a $17 billion chip plant to be established in the city, the reports said.

“We will work to do our best to move as quickly as possible, but at this point in time, I can‘t tell you exactly when that draft performance agreement would be available. It all depends on how negotiations go,” Christy Moffett, managing director of Travis County said.

Samsung is hoping to finalize a performance agreement by mid-August, according to the county official.

Samsung’s $17 billion investment in Austin is expected to bring about $8.9 billion worth of economic benefits to the city, including the creation of around 20,000 jobs.

The Korean chipmaker has prepared for the new plant for several years as it increased purchases of land nearby its current plant.

Samsung was expected to announce its Austin investment earlier this year, but the imprisonment of its de facto chief Lee Jae-yong appears to have slowed decision-making. Lee was place behind bars again in January after a bribery conviction.

While Samsung’s plan stalled, a global chip shortage prompted other chip players like US-based Intel and Taiwan’s TSMC to move swiftly and announce aggressive expansion plans.

Intel is even rumored to take over GlobalFoundries, the fourth-largest foundry company to increase its chip manufacturing capacity.

Industry observers say a breakthrough may come for Samsung next month, if South Korean President Moon Jae-in, following the tradition of pardoning hundreds of criminals to mark the Aug. 15 Liberation Day, includes Lee on the list.

Some say the third generation leader of Samsung Group is more likely to be released on parole than by a pardon, as he has served nearly two thirds of his jail term. He is reportedly on the Justice Ministry’s parole list.

“The business community is desperate for the Samsung leader’s return in terms of Samsung’s contribution to the Korean economy,” said an industry official. “A special pardon for Lee would be more effective than a parole as it would put him back to normal business activities with no legal restrictions, such as a travel ban.”

The country’s major business lobbies have made their united front clear on the issue, asking President Moon to consider leniency for Lee.

Outside of the business community, however, there are people voicing opposition.

By cutting Lee’s jail time short, South Korea will be choosing not to end a much-criticized history of light punishments for law-breaking chaebol chiefs.

Last week, People’s Solidarity for Participatory Democracy submitted petitions to Cheong Wa Dae, the Ministry of Justice and relevant deliberation committees, expressing its objection to any discussion for Lee’s early release.

By Song Su-hyun (