Samsung Electronics Invests 7.2 Trillion KRW in Q2 R&D... 10 Times Operating Profit Executed

Samsung Electronics continued its investment to prepare for future growth amid the semiconductor downturn by executing 7.2 trillion KRW in research and development (R&D) spending in the second quarter of this year, more than 10 times its operating profit.

[Image source=Yonhap News]

On the 27th, Samsung Electronics announced its finalized results, revealing that its R&D and facility investment in the second quarter amounted to 7.2 trillion KRW and 14.5 trillion KRW, respectively. Despite the semiconductor industry slump that began at the end of last year, with competitors such as SK Hynix, Micron, TSMC, and Intel reducing capital expenditures, Samsung Electronics is preparing for a semiconductor market rebound by maintaining record-high R&D and facility investments.

Samsung Electronics’ R&D investment of 7.2 trillion KRW in the second quarter is the largest ever, marking a 15.2% increase compared to the 6.25 trillion KRW invested in the second quarter of last year. This amount is also more than 10 times the operating profit of 668.5 billion KRW recorded in the second quarter.

Last year, Samsung Electronics made a record-high R&D investment of 24.9 trillion KRW. Having invested about 14 trillion KRW in R&D in the first half of this year alone, the total R&D investment for this year is likely to surpass last year’s figure. In fact, Samsung Electronics is one of the companies that continuously expands its R&D investment annually. Among 41 Korean companies included in the global list of 2,500 companies, Samsung Electronics accounts for 49.1% of the total R&D investment.

Despite ongoing earnings deterioration, Samsung Electronics also executed a record-high facility investment of 14.5 trillion KRW in the second quarter. This is an 18% increase compared to the 12.3 trillion KRW spent in the second quarter of last year and marks the third-largest facility investment ever.

Samsung Electronics spent 25.3 trillion KRW on facility investments in the first half of the year, increasing by about 5 trillion KRW compared to 20.2 trillion KRW in the first half of last year. Considering that memory semiconductor investments remained at a similar level to last year, most of the increased investment is analyzed to be concentrated on foundry semiconductor investments. Samsung Electronics is currently constructing foundry semiconductor cleanrooms in Pyeongtaek, Gyeonggi Province, and Taylor, USA, to respond quickly and flexibly to market and customer demands.

Meanwhile, Samsung Electronics recorded a loss of 8.94 trillion KRW in the semiconductor division in the first half of this year. Due to continuous losses in the semiconductor division, Samsung Electronics posted quarterly operating profits below 1 trillion KRW for two consecutive quarters in the first and second quarters. However, as in the past, Samsung Electronics follows a 'super-gap' strategy of bold investment during semiconductor downturns to lead the global semiconductor market. Through aggressive R&D and facility investments, the company aims not only to maintain leadership in the high-performance memory market such as DDR5 and HBM but also to secure a strong foothold in next-generation semiconductor markets expected to grow rapidly, including AI, HPC, and automotive electronics. Kyung Kye-hyun, President of Samsung Electronics’ Device Solutions (DS) Division, recently stated, "Only through investment can a company imagine new innovations, so investment is even more important during economic downturns," adding, "Companies that innovate boldly during tough economic times will rise to the top when the tide turns."

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