Samsung Electronics, once the world’s No. 1 research and development (R&D) company, has slipped to seventh place. The number of Korean companies in the top 2,500 global R&D companies has also dropped.
Samsung’s R&D investment in 2022 amounted to 18.435 billion euros (US$20.083 billion), pulling down the Korean tech giant by one spot to seventh place from sixth in 2021, according to the 2023 Industrial R&D Investment Scoreboard released by the European Commission on Dec. 17. Samsung was the only company in the top 10 to slide from the previous year’s ranking. It lost the number six spot to German automaker Volkswagen (€18.98 billion).
Samsung had held the top spot several times in the past including 2018. However, this time, it lost the lead to U.S. information and communications technology (ICT) companies such as Alphabet, Meta, Microsoft, and Apple, and ranked even behind Huawei and Volkswagen.
Last year, the top 2500 companies’ total R&D investment rose 12.8 percent year on year to €1.249 trillion, the highest ever. Samsung Electronics’ investment rose 10.3 percent, which was below average. There were only four Korean companies in the top 100: SK hynix (59th), LG Electronics (72nd) and Hyundai Motor (91st). In 2013, there were 80 Korean companies in the top 2,500 club, but the figure dropped to 47 in 2022.
Last year, the top 10 and 50 companies globally accounted for 17.7 percent and 39.1 percent of the world’s total R&D investment, respectively. “Over the past two decades, R&D investments have led by a small number of companies,” the European Commission said. South Korea is a country where only a few companies make big R&D investments. Samsung Electronics accounts for 49.1 percent of all annual R&D investment among Korean companies, and the top five companies account for 75.5 percent of Korea’s total R&D investment. In this aspect, Korea dwarfs Japan (26.1 percent), the U.S. (23.7 percent), and China (22.2 percent).
South Korea is also out of step with a global trend toward stronger R&D incentives across industries. While most countries in the Organization for Economic Cooperation and Development (OECD) do not differentiate R&D tax incentives for large and small companies, Korea has a system that instead discriminates against large companies.
According to the Korea Institute of S&T Evaluation and Planning (KISTEP), South Korea ranks first among OECD countries in the number of researchers per capita at 90.6, but the number of PhD degree holders in science and technology stood at 39, which is below the OECD average (49.2). It ranks 21st out of 36 countries. “By 2050, the number of those with science and engineering master’s or higher degrees will be half of what it is today,” said a KISTEP official.