Preparation for Future
Samsung and LG Electronics will invest 45 trillion won (US$41 billion) combined towards R&D and facilities expansion this year. The number is about 12 percent of the Korean government's budget for 2015.
On Jan. 29, Samsung revealed its plan to increase its investment in production facilities this year, together with the announcement of its results for last year. It became the second firm to officially announce its plan to augment its investment in facilities in 2014, following Hyundai Motor Company.
The Korean tech giant injected 23.4 trillion won (US$21.3 billion) in production facilities last year, including 14.3 trillion won (US$13.0 billion) in semiconductors and 4 trillion won (US$3.6 billion) in displays. The company said that the number will increase this year, likely to surpass 24 trillion won (US$21.9 billion). The number surged to record highs in 2013, but this year's figure is expected to exceed the prior record of 23.76 trillion won (US$21.71 billion) in 2013. In particular, Samsung is likely to accelerate efforts to grow mainly with its semiconductor business, which is a top contributor to the company's performance.
The firm's investment in R&D is projected to surpass 14.78 trillion won (US$13.47 billion) this year, which was achieved in 2013. As a result, Samsung is forecast to invest 24 trillion won (US$21.9 billion) in facilities and 15 trillion won (US$13.7 billion) in R&D this year, totaling nearly 40 trillion won (US$36 billion).
LG, on the other hand, is likely to inject over 3 trillion won (US$2.7 billion) this year in facilities and R&D, respectively. The company has decided not to disclose its annual investment plan for facilities from this year, but it will reportedly increase its investment in existing production lines for smartphones, TVs, and consumer electronics. The firm is said to be making a large-scale investment in building bases for new growth engines in Pyeongtaek, Gyeonggi Province, and the Magok Industrial Complex in Seoul.
This year's investment is likely to hover above 2.7114 trillion won (US$2.4738 billion), which was accomplished in 2013, and therefore nearly 3 trillion won (US$2.7371 billion) is expected to be invested in facilities. LG has injected around 3 trillion won in R&D since 2012.