SEOUL, South Korea – South Korea's Samsung Group on Wednesday, August 8, said it would invest $22 billion over the next 3 years in cutting-edge technology including artificial intelligence, self-driving cars and biopharmaceuticals, as it searches for ways to drive future growth.
The investment will be primarily led by Samsung Electronics, the world's biggest maker of memory chips, which has faced a string of setbacks in recent years, including a fall in smartphone sales and a corruption scandal that saw its vice-chairman Lee Jae-yong jailed last year.
Although demand for its memory chips remains robust, the market for its smartphones appears to have hit a wall, prompting the company to search for fresh growth opportunities.
"Samsung expects innovations powered by AI technology will drive the industry's transformation, while the next-generation 5G telecommunications technology will create new opportunities in autonomous driving, the Internet of Things (IoT) and robotics," the company said in a statement.
The $22 billion is part of a total of 180 trillion won ($161 billion) that the group plans to invest over the next 3 years across its businesses, with more than 70% of the money to be spent in South Korea.
Samsung will also expand investments in manufacturing hubs, seeking to increase production of semiconductors and display screens as well as dominate new markets by developing technology to power self-driving cars.
"Today's announcement shows Samsung is serious in its efforts to develop new growth engines" at a time when its semiconductor business and mobile sector are both facing mounting competition from Chinese rivals, Greg Roh of HMC Securities & Investment told AFP.
The company said it expected to add 40,000 new jobs over the next three years, in news that will likely bring relief to South Korea's government which is currently struggling with high youth unemployment.
'Begging for investment'
The announcement came two days after South Korean Finance Minister Kim Dong-yeon met the group's de-facto head Lee, calling for Samsung to create new jobs and boost the economy.
The scion of the founding family, Lee was jailed last year for his part in the graft scandal that brought down former president Park Geun-hye.
He has since been released after some of his convictions were quashed on appeal, and is now awaiting a Supreme Court decision.
Critics say Kim's meeting with Lee may send a wrong signal to the court that the government backs leniency for the beleaguered businessman.
"Kim's visit... gave a wrong impression that a top government minister is begging for investment by Samsung", Chung Sun-sup, head of the corporate analysis website Chaebol.com, told AFP.
Chung said reformist President Moon Jae-in's campaign to clip the wings of the country's powerful family-run conglomerates, known as chaebols, appeared to be losing steam in the face of stonewalling business groups which are "wielding prospects for investment as their weapons".
"Kim's visit to Samsung... showed the momentum for chaebol reform has been all but lost", he said.
Samsung's second quarter profit dipped slightly to 11.04 trillion won, down from 11.05 trillion won a year earlier.
Total sales for April-June fell 4.1 percent year-on-year to 58.48 trillion won, with revenues for the company's mobile division plunging 22 percent in the same period.
The company has been fighting off competition from Chinese rivals including Huawei, which last week said it could replace Samsung as the world's top smartphone maker by late next year, after data showed it surpassed Apple for the number-two spot in a tightening global smartphone market.
Investors greeted Wednesday's news with cautious optimism, with Samsung Electronics' shares rising 0.21 percent to close at 46,800 won. – Rappler.com