R&D Investment Up despite Profit Decline
Despite a drop in its earnings, Samsung Electronics increased its investment in research and development (R&D) in 2019 to prepare future growth engines.
The company’s R&D expenditure totaled 20.19 trillion won in 2019, topping the 20 trillion won mark for the first time, according to a consolidated audit report published on Feb. 26. The figure represented a 8.3 percent increase from 18.65 trillion won in the previous year.
Its R&D investment shot up despite declines of 5.5 percent and 52.8 percent in sales and operating profit, respectively, due to a slowdown in the semiconductor market last year. As a result, Samsung Electronics' R&D spending compared with sales stood at 8.8 percent last year, more than 1 percentage point higher from 7.7 percent in 2018.
The growth in the R&D expenditure was led by investment in system semiconductors and quantum dot (QD) displays. In April 2019, the Korean tech giant unveiled a vision to invest 133 trillion won in system semiconductors by 2030 to become No. 1 in the non-memory business. In October, it decided to invest 13 trillion won in new QD display production lines.
However, its corporate tax shrank due to a drop in its earnings. In the consolidated audit report, Samsung Electronics reported that its corporate tax expense totaled 8,693.3 billion won, down 48.3 percent from 16,815.1 billion won in the previous year. Its corporate tax accounted for about 3.8 percent of its sales, down from 6.9 percent in 2018.