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Last updated: November 8, 2005 4:27 pm

Samsung unveils $45bn R&D spending plan

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Samsung Group, South Korea’s biggest conglomerate, on Tuesday unveiled a $45bn investment plan over the next five years that it said was aimed at boosting its research-and-development capabilities.

The plan represents a sharp increase in absolute terms in R&D spending compared with the past decade, when Samsung invested $35bn.

But compared with this year, Samsung’s growth in R&D spending over the next five years is expected to lag behind sales, which are forecast to more than double during the period while annual R&D investment is expected to rise by only about 50 per cent.

“In the 21st century, only companies that create and lead markets through innovative technology will survive,” said Lee Yoon-woo, the group’s vice-chairman and chief technology officer.

Samsung has led the country’s rapid technological development over the past decade, becoming a global leader in the production of semiconductors, flat panel displays and mobile phones.

The bulk of the company’s new investment in R&D will be made in its 13 “growth engines” including high-capacity memory chips, next-generation display devices, mobile telecommunications and digital TVs.

It also plans to develop more cutting-edge products in other business areas such as next-generation printers, system LSI (large-scale integration) chips, mass storage and air control systems, and electro-mechanical components.

To increase the number of its products that have a leading share of their respective markets from 21 to 50 by 2010, the group plans to hire about 30,000 new R&D staff. It sees group-wide annual revenue of $270bn in five years with $30bn in pre-tax profits.

“If Samsung wants to achieve its goal of being a top-tier company, we will have to put greater focus on our R&D capability,” Mr Lee said.

With about 62 affiliates, Samsung is South Korea’s most influential chaebol,
currently accounting for about 15 per cent of the country’s economic activity.

Its has electronics, construction and ship-building divisions as well as brokerage and insurance operations and even an amusement park. This year, the conglomerate is expected to report sales of $139.5bn with R&D spending earmarked at $7.3bn.

Last week Samsung Electronics, its crown jewel, announced an ambitious plan to double annual revenue by 2010 from last year’s $57.6bn through aggressive research spending and technological innovation.

Aggressive investment in digital segments has allowed Samsung to quickly catch
up with bigger overseas rivals. The group expects its brand value to reach $70bn by 2010.

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