Samsung 124 Trillion · Hynix 8 Trillion... Companies Increasing 'Investment Ammunition' (Comprehensive)

Increase in Cash Assets of the Four Major Groups Samsung, SK, Hyundai Motor, and LG
Preparing to Secure Semiconductor and Battery Markets...Improvement in Financial Soundness Including Borrowings

[Asia Economy Reporters Oh Hyung-gil and Lee Hye-young] Despite ongoing domestic and international economic uncertainties, Korean companies are steadily increasing their cash holdings. They are preparing investment funds to secure future market dominance while bracing for adverse factors such as the massive spread of the COVID-19 Omicron variant, rising raw material and logistics costs, and the Russia-Ukraine conflict. It is expected that they will actively invest to seize the returning semiconductor boom and the explosively growing battery market.

Samsung Electronics achieved a record high performance with annual sales exceeding 279 trillion won. Samsung Electronics announced on the 7th that, based on its preliminary consolidated results for last year, sales reached 279.04 trillion won, and operating profit was 51.57 trillion won. The photo shows the Samsung Electronics Seocho building. Photo by Mun Honam munonam@

Loading M&A and Investment Ammunition

Major companies in the four largest groups?Samsung, SK, Hyundai Motor, and LG?are showing an increasing trend in cash holdings. As of the end of last year, Samsung Electronics held cash assets worth 124.2067 trillion KRW, an increase of about 4 trillion KRW compared to the previous quarter.

Cash assets include cash, cash equivalents, and short-term financial product balances, which can be used at any time within one year. Considering the rapidly changing management environment such as interest rate hikes, financial soundness has also improved. Samsung Electronics' debt ratio fell from 7% in 2020 to 6% last year.

Hyundai Motor's current assets, including cash assets, increased by 487.9 billion KRW compared to the end of the previous year, reaching 8.8565 trillion KRW. Its borrowings also rose by 17.9% year-on-year to 10.8 trillion KRW. SK Hynix's cash assets expanded by 75%, from 4.95 trillion KRW in 2020 to 8.67 trillion KRW as of the end of last year. SK Innovation also secured 7.41 trillion KRW in cash equivalents as of the end of last year.

During the same period, LG Electronics held cash equivalents worth 6.0515 trillion KRW, up 2.6%. LG Chem, through the IPO of LG Energy Solution, secured 2.5 trillion KRW and is in a net cash position without borrowings as of the end of January.

An industry insider explained, "As economic uncertainty grows, securing cash assets within companies has become an unwritten rule," adding, "Since last year was a period of global quantitative easing and this year is shifting to a tightening phase, this is a proactive measure to execute large-scale investments."

On the morning of the 27th, at the Korea Exchange in Yeouido, Seoul, the opening price of 597,000 won was displayed on the electronic board during the KOSPI listing ceremony of LG Energy Solution. LG Energy Solution's market capitalization is 112.32 trillion won, surpassing SK Hynix to claim the second place in market capitalization rankings. Photo by Jinhyung Kang aymsdream@

Investment, More Investment: The ‘Full-Scale Offensive’ Starts

The International Monetary Fund (IMF) lowered its global economic growth forecast for this year by 0.5 percentage points to 4.4%, expecting a slight economic slowdown worldwide. Despite the gloomy outlook, Korean companies are expected to accelerate their investment pace. There is a prevailing atmosphere that they cannot loosen the reins on investments that will determine market leadership and share competition.

Samsung Electronics and SK Hynix plan to make aggressive investments this year as fierce competition among global semiconductor companies is anticipated. Samsung Electronics invested 43.6 trillion KRW in semiconductor facilities last year, about 10.7 trillion KRW more than the 32.9 trillion KRW invested the year before. Samsung Electronics, which made history by surpassing 300 trillion KRW in sales for the first time last year, is expected to invest even more this year to maintain its position as the "global semiconductor king."

In the first half of this year, Samsung Electronics will begin construction of its second foundry plant in the United States with an investment of about 20 trillion KRW. As the "nano competition" intensifies, infrastructure investments for introducing extreme ultraviolet (EUV) equipment and transitioning to advanced processes will continue. Earlier, Samsung Electronics announced plans to invest a total of 171 trillion KRW in the system semiconductor sector by 2030.

SK Hynix will also execute large-scale investments this year, visibly benefiting from the acquisition of Intel's NAND division, aiming to expand its market share. In a January earnings conference call, SK Hynix pledged to enhance its business capabilities to maximize synergy in the NAND business.

SK Hynix, which invested 13.4 trillion KRW in facilities last year, is expected to invest around 17 trillion KRW this year. Investments will also accelerate in establishing factories and R&D centers within the Yongin semiconductor cluster, where a total of 120 trillion KRW will be invested.

LG Electronics, which surpassed Whirlpool last year to become the global leader in home appliance sales, is expected to continue bold investments in core business areas and the automotive electronics sector. LG Electronics invested about 3.6 trillion KRW last year.

Hyundai Motor plans to invest 9.2 trillion KRW in the automotive sector this year. It will invest 5 trillion KRW in capital expenditures (CAPEX) and 3.6 trillion KRW in R&D, competing in electric and hydrogen vehicles.

Investments in the battery and advanced materials sectors will also be actively pursued. SK Innovation has confirmed a 6.5 trillion KRW investment plan for the battery sector this year. LG Chem plans to invest 4.1 trillion KRW this year, including 2.1 trillion KRW in petrochemicals and 1 trillion KRW in advanced materials.

This content was produced with the assistance of AI translation services.