Samsung Group, the South Korean consumer electronics company, is gearing up to spend $22 billion on advanced technologies as it seeks new avenues of growth.
According to a report in Reuters citing Samsung Electronics, the company will invest in artificial intelligence, 5G, technology for the automotive market and biopharmaceuticals. Reuters noted this marks the first time Samsung has been specific about investment areas and implies it is placing more emphasis than in the past on new businesses. It also highlights the fact that its core smartphone and chip businesses are starting to weaken. The report noted the $22 billion investment is part of a larger three-year plan that is aimed at creating new jobs and finding new revenue streams. “The total investment size is not surprising. But Samsung can be more active in M&As to do better at AI or 5G when Lee is fully back to his business,” Greg Roh, an analyst at Hyundai Motor Securities, told Reuters in an interview.
Samsung didn’t break down how much money will go to which investment but did note it plans to invest a lot to expand its AI research abilities, increasing the number of AI researchers to 1,000. It also said it plans to invest heavily in biopharmaceuticals, reported Reuters. “Samsung has seen strong growth from both its contract manufacturing and biosimilar businesses. It will continue to invest heavily in the businesses, including developing and manufacturing biosimilars,” the statement said, according to Reuters.
The investment announcement comes a few days after Samsung Electronics reported weaker than expected results during the second quarter as slow sales of smartphones and display panels resulted in a revenue decline. Samsung said its IT and mobile business reported a slowdown both on a year-over-basis and from the first quarter due to weakness in the high-end Galaxy S9 mobile device. Samsung warned of continued weakness in mobile during the second half, due to pricing issues and new product introductions from competitors, and said it planned to move up the preview date of its new Galaxy Note for an August 9 event in New York.