ArrowArtboardCreated with Sketch.Title ChevronTitle ChevronEye IconIcon FacebookIcon LinkedinIcon Mail ContactPath LayerIcon MailMenu BurgerPositive ArrowIcon PrintIcon SearchSite TitleTitle ChevronIcon Twitter
Asia300

Samsung earmarks $22bn for nurturing new fields

South Korean company aims to grow 5G and biopharma businesses

Samsung Vice Chairman Lee Jae-yong visits the company's semiconductor fabrication facility in Pyeongtaek, South Korea. (Photo courtesy of Samsung)
Samsung Vice Chairman Lee Jae-yong, second from right, visits the company's semiconductor fabrication facility in Pyeongtaek, South Korea. (Photo courtesy of Samsung)

SEOUL -- Samsung Electronics will spend 180 trillion won ($160 billion) on capital investment and research and development over the next three years, of which 25 trillion won, or $22 billion, will go to the development of new businesses, the company said Wednesday.

The overall capital investment and R&D outlay is an increase of 10 trillion won from the previous three-year period through 2017 for the South Korean technology company.

Although the company has not released a breakdown of the spending, 60% will likely be devoted to memory products like semiconductors, while liquid crystal display and organic light-emitting diode panels receive 10%. That would keep investment in the chip segment roughly the same as the last fiscal year ended December, but panels would fall from a 20% slice to allocate money for the new businesses and other expenditures.

The new businesses that Samsung intends to develop include fifth-generation wireless communications, biopharmaceuticals, artificial intelligence and auto components.

Of the total, more than 100 trillion won is expected to be earmarked for capital investment and 130 trillion won will be spent in South Korea.

Infrastructure for 5G services and biopharmaceuticals are areas of particular interest to Vice Chairman Lee Jae-yong, who leads the company.

In 5G, Samsung is cultivating the market for chips in devices like smartphones and base stations in the U.S., aiming to secure 20% of the global market by 2021, double that of its 4G share.

The company will also focus on developing biosimilar drugs going forward, having already established manufacturing services for pharmaceutical products.

Voice and image-recognition technology for smartphones and image sensors for self-driving cars will be among the artificial intelligence-related products to receive investment.

Aside from biopharmaceutical manufacturing services, Samsung is not a strong player in any of these fields and will have to play catch-up with the world's top information technology companies and components makers.

When Lee was arrested in February 2017 on bribery charges involving ousted President Park Geun-hye, Samsung insiders were more worried about its future two years down the road than its current situation. They believed managers from mainstay segments like semiconductors could watch over daily operations, but were concerned that the company's growth strategy would be set back without its chief.

But the company is no longer leaderless after Lee's release last February. He vowed Monday that Samsung would lead the so-called fourth industrial revolution, to which the four new businesses are closely connected.

In each area, however, technological advance is rapid and the competition is intense. Should these businesses fail to produce results by 2020, the company could risk a sudden drop in earnings as the chip market deteriorates.

Mitsuru Obe in Tokyo contributed to this report

Sponsored Content

About Sponsored Content This content was commissioned by Nikkei's Global Business Bureau.

You have {{numberArticlesLeft}} free article{{numberArticlesLeft-plural}} left this monthThis is your last free article this month

Stay ahead with our exclusives on Asia;
the most dynamic market in the world.

Stay ahead with our exclusives on Asia

Get trusted insights from experts within Asia itself.

Get trusted insights from experts
within Asia itself.

Get Unlimited access

You have {{numberArticlesLeft}} free article{{numberArticlesLeft-plural}} left this month

This is your last free article this month

Stay ahead with our exclusives on Asia; the most
dynamic market in the world
.

Get trusted insights from experts
within Asia itself.

Try 3 months for $9

Offer ends June 30th

Your trial period has expired

You need a subscription to...

  • Read all stories with unlimited access
  • Use our mobile and tablet apps
See all offers and subscribe

Your full access to the Nikkei Asian Review has expired

You need a subscription to:

  • Read all stories with unlimited access
  • Use our mobile and tablet apps
See all offers
NAR on print phone, device, and tablet media