Samsung Investing $38.3 Billion in 2011 to Get Ahead of Rivals

Jan. 5, 2011
Company will increase its staff and build new plants

Samsung Group said on Jan. 5 that it plans to invest almost $40 billion in 2011. The company plans to employ a record 25,000 staff this year, up 11% from 2010.

The nation's largest conglomerate, which accounts for almost 20% of South Korea's gross domestic product, will spend 43.1 trillion won (US$38.3 billion) on a range of sectors, including research and development.

Samsung said more than two thirds of the cash -- 29.9 trillion won -- will go on expanding or building new plants producing semiconductors, liquid crystal display panels and other electronics.

A further 12.1 trillion won will be allocated to research and development.

The new total investment, up 18% from last year, is aimed at reaffirming the "global market dominance of Samsung's major businesses," the group said in its 2011 investment plan.

Projected investment in semiconductor plants amounts to 10.3 trillion won.

"Uncertainties over the global economy still persist, but we have reached the decision... in an effort to beef up the global competitiveness of our flagship businesses," Samsung said.

Samsung is at the head of South Korea's drive to boost growth through active investment in next-generation industries and Chairman Lee Kun-Hee has urged his group to diversify into biomedical research and green industries. The new investment plan also reflects an overall shift in the country's major growth drivers, said Chang Suk-In, a senior researcher at the Korea Institute for Industrial Economics and Trade. "Samsung has a long history of making well-timed, preemptive investments in new businesses, for instance semiconductors, when industry rivals.

"It's a perfect time to make preemptive investments and take a lead in new industries when companies in advanced nations are still reeling from the economic downturn and don't have the luxury of making large new investments," Chang said.

Samsung Electronics, the world's largest maker of flat screens and memory chips, is the standard bearer for the group. The world's second largest maker of mobile phones after Nokia posted a record third-quarter net profit in December as the global recovery fanned demand for memory chips and handsets, including smartphones.

The firm has strived to expand its presence in the lucrative smartphone and tablet computer markets as its Galaxy S and Galaxy Tab have gone head-to-head with Apple and its market-leading iPhone and iPad.

Samsung last year unveiled a plan to nurture new businesses including renewable energy and healthcare, with the goal of achieving annual sales worth 50 trillion won in 2020.

The group's aggressive investment comes as it tries to find new growth engines at the start of a third generation of family management. Jay Y. Lee, the only son of chairman Lee Kun-Hee, was promoted to president of Samsung Electronics last December when his two sisters were also elevated at the group's key subsidiaries, which include hotel and textile affiliates.

Samsung, which means "Three Stars," was launched in 1938 when Lee Byung-Chull, the son of a wealthy landowner, opened a trading company. Samsung Electronics began operations in 1969. The founder's son Lee Kun-Hee, now 68, led Samsung for almost 20 years and was widely credited with turning it into a global brand. e stepped down in April 2008 after being charged with tax evasion but returned as chairman of Samsung Electronics in March after receiving a presidential pardon.

Copyright Agence France-Presse, 2011

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