Major companies strengthen R&D investments despite economic downturn

Samsung Electronics headquarters in Seoul / Korea Times file

By Kim Hyun-bin

Major companies are boosting research and development and facility investments to enhance future competitiveness despite sluggish performance amid a severe economic downturn, according to industry officials, Tuesday.

Samsung Electronics recorded the lowest quarterly performance in 14 years with an operating profit of 640.2 billion won ($477.6 million) in the first quarter of this year. However, the company is set to inject its largest amount ever into R&D and facility investments.

Samsung's R&D investments in the first quarter came to 6.58 trillion won more than 10 times the quarter's operating profit of 640 billion won. The company also injected 10.7 trillion won into facility investments, an increase of 36 percent compared to the same period last year and the largest amount for any first quarter.

"This year, we will increase wafer input development to prepare for more competitive future products," Kim Ki-nam, CEO of Samsung's semiconductor division, said at a management briefing for employees on April 26.

Investments in Samsung's future growth are also noticeable at its Pyeongtaek campus.

"We will continue to invest in infrastructure mainly for the Pyeongtaek 3rd and 4th lines to secure and respond promptly to medium- to long-term growth demand. We will also expand the proportion of R&D investments," Samsung Electronics official said during a conference call after releasing its first-quarter earnings last week.

SK hynix and LG Electronics also plan to continue their investments.

SK hynix plans to continue investing in the latest memory products that are expected to lead market changes, such as artificial intelligence (AI). The company also plans to make every effort to prepare for a quick performance rebound when the market improves, by investing in more cost-competitive processes such as 10-nanometer-class 5th-generation DRAM and 238-layer NAND.

"We will firmly establish our leadership in the premium market, mainly with products that are expected to have significant growth in demand from this year, such as DDR5, LPDDR5 and HBM3, for which our company has secured the world's highest competitiveness," said Kim Woo-hyun, chief financial officer of SK hynix.

LG Electronics is expected to make large-scale investments. Last year, its R&D spending increased 14.5 percent from the previous year to 2.39 trillion won. LG Electronics has specifically announced a 28 percent increase in facility investments this year, from last year's 4.16 trillion won to 5.33 trillion won.