Big Tech Firms Boosting R&D Spending
By Kim Yoo-chul
Leading IT companies have been spending more on research and development (R&D) projects to strengthen their technology leadership.
The Financial Supervisory Service (FSS) said Thursday that the combined R&D spending by South Korea's top five IT companies came to 7.7 trillion won during the first nine months of this year, up 4.6 percent from a year earlier.
Samsung Electronics, which is the industry leader in both computer and flash memory chips, spent 5.2 trillion won on R&D as of the end of this years' third quarter up from 4.9 trillion won a year ago.
SK Telecom, the nation's top mobile carrier, has also increased its spending by 0.7 percent to 214 billion won during the same period of 2009.
LG Display hiked spending by 158.2 percent to 561 billion won from 206.3 billion won a year earlier.
``We are heavily betting on next-growth engines such as solar cells, light emitting diodes (LEDs) and electronic paper. The increased R&D spending reflects our strategy to focus on new areas,'' a company spokesman said.
LG Display is the world's No. 2 manufacturer of liquid crystal display (LCD) panels after Samsung Electronics. LCDs are used in televisions, mobile phones, laptops and other digital devices.
LG Electronics, Samsung's cross-town rival, has cut its spending on R&D by 5.1 percent to 1.18 trillion won during the January-September period, while Hynix Semiconductor also lowered its budget by 8.1 percent from a year ago, according to data.
``The FSS data was based on parental basis. LG plans to spend 10 percent more on R&D this year than in 2008 on a consolidated basis,'' an LG Electronics spokesman said.
``R&D spending reduced slightly. But the R&D portion of the total revenue increased by 0.3 percentage points to reach 10.3 percent during the latest period,'' a Hynix spokesman said. As of the end of third quarter, the world's No. 2 maker of computer memory chips spent 498.9 billion won.
``We will continue to spend 10 percent of the total revenue on just R&D for further technology advancement,'' said the official.
But the FSS said Samsung has cut 3.1 percent of its workforce over this period, while the total number of staff members at Hynix decreased by 5.7 percent due to ``technical reasons.''
``South Korea's leading IT companies are making an aggressive move for R&D inspired by better earnings performances. Amid hopeful signs in IT-related industries, they will maintain their competitive edge over their overseas rivals,'' Song Jong-ho, an analyst at Daewoo Securities, said.