Samsung £120bn Investment Plan Targets AI, 5G

Samsung Group has said it plans to invest 25 trillion won (£17bn) into emerging technologies such as artificial intelligence, 5G wireless networks, computing for automobiles and biopharmaceuticals.

The investment plan, the company’s first to name specific investment areas, comes as mainstay revenue sources for the conglomerate, such as smartphones and semiconductors, show signs of saturation.

The global smartphone market showed its first-ever decline earlier this year, and the lucrative Samsung Electronics unit recently reported its first drop in profits for seven quarters.

Meanwhile, Chinese rivals including Xiaomi and Huawei are providing close competition in the smartphone market, with Chinese firms also making inroads into the memory chip business.

Long-term strategy

Samsung Electronics plans to account for the bulk of the spending into new technologies, which is to take place over the next three years.

The investments form part of a broader 180tn won package, the remainder of which is to go toward semiconductor and display manufacturing facilities and to drive external start-up projects that are projected to create up to 40,000 jobs in South Korea.

Samsung is by far South Korea’s largest conglomerate, and Samsung Electronics last year briefly topped Apple as the world’s most profitable technology company.

But doubts hang over the firm’s long-term strategy, and it has struggled to define its ongoing plans amidst a corruption scandal that saw its de facto head and heir apparent, Lee Jae-yong, imprisoned last year.

Lee was granted a suspended sentence on appeal earlier this year, with the case headed for a final trial in the coming months, something that risks further damaging Samsung’s reputation with the South Korean public.

Samsung last announced long-term investment plans in 2010, with spending targeted at only $20bn (£15bn) over a five-year period.

New growth

The new package, which amounts to a total of £120bn, underscores the urgency with which Samsung is seeking new areas of growth, and is far larger than the $30bn, or £23bn, Apple said in January it would spend to expand its US operations.

Analysts said Samsung could use the funds to carry out acquisitions that would improve its edge in areas such as AI and 5G in particular.

Samsung Electronics said the plan followed “many months of deliberations and review” by the overall group.

The company, which now tops Intel as the world’s biggest semiconductor maker due to its extensive memory chip operations, as well as being the top smartphone manufacturer, did not provide a breakdown of its planned investment figures.

It said it would increase the number of advanced AI researchers to 1,000 across its worldwide AI centres, which include a massive planned AI research facility in France.

The spending plan includes capital investment as well as research and development in chips and displays and represents a 6 percent increase from spending over the past three years.

Lee has pushed Samsung’s expansion into automotibile electronics and spearheaded the company’s $8bn purchase of US firm Harman International in 2016.