"Samsung SDS Bets on High Cloud Growth with Aggressive Investment Over 500 Billion Won This Year"

Over 500 Billion Invested in Cloud for 2 Consecutive Years
Expansion of Dongtan Data Center Servers Launched Early This Year
Targeting Cloud Transition Demand Amid Economic Downturn

[Asia Economy Reporter Yuri Choi] Samsung SDS is making aggressive investments in its cloud business again this year, following last year. The company plans to pour more than 500 billion KRW for two consecutive years to ride the wave of cloud transformation. As demand is expected to increase despite the economic downturn, it is nurturing cloud as a growth engine.

On the 26th, Samsung SDS stated during its earnings conference call, "This year, capital expenditures (CAPEX) including cloud are expected to increase to the mid-500 billion KRW range."

Last year, the company invested a record-high 671 billion KRW in CAPEX. It increased investments in the cloud business by building a new data center in Dongtan and expanding facilities. The Dongtan data center is a facility designed to meet the demand for high-performance computing (HPC). Construction was completed at the end of last month, and it began operations earlier this month. Using large-scale graphics processing unit (GPU) servers, it performs high-performance computing tasks such as big data calculations and provides these services via the cloud.

This year, investments in the Dongtan data center facilities will continue. More than 500 billion KRW will be poured into IT equipment such as servers, storage, and networks. Considering that, except for last year, the company has spent 200 to 300 billion KRW annually on CAPEX, this represents nearly double the investment.

Based on these investments, the company plans to expand its customer base. In the domestic market, it intends to strengthen certifications required for financial and public cloud businesses. Overseas, it will expand the number of data centers (regions) from five to ten to secure corporate partners. Gu Hyeong-jun, Vice President of Samsung SDS Cloud Service Division, said, "From the customer's perspective, we will focus on the cloud business with specialized products such as usage-based cloud network services that enable cost reduction and low-cost cloud storage products for long-term archiving."

The reason for continuing aggressive investments in the cloud business is its high growth potential. Companies are transitioning to the cloud to reduce IT costs and increase productivity. Vice President Gu predicted, "The cloud market is expected to grow by 18% annually until 2026," adding, "Despite companies' tightened management, the demand for cloud utilization will increase."

The growth potential was also confirmed in the earnings. Samsung SDS surpassed 1 trillion KRW in cloud business sales last year, a 53.3% increase compared to the previous year. The proportion of cloud within the core IT service business rose from 15% in 2021 to 20% last year. Thanks to cloud growth, total sales last year reached a record high of 17.2347 trillion KRW. Operating profit increased by 13.4% year-on-year to 916.1 billion KRW.

Meanwhile, logistics business sales increased by 41% to 11.2666 trillion KRW, thanks to increased air cargo volume and overseas inland warehouse logistics. This year, the company plans to continue growth by expanding the service area of its digital logistics platform, 'Cello Square,' to the United States and Europe.

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