Samsung to invest billions in new tech to drive fresh growth

SEOUL — South Korea's Samsung Group on Wednesday said it would invest $22 billion over the next three years in cutting-edge technology including artificial intelligence, self-driving cars and biopharmaceuticals, as it searches for ways to drive future growth.

The investment will be primarily led by Samsung Electronics, the world's biggest maker of memory chips, which has faced a string of setbacks in recent years, including a fall in smartphone sales and a corruption scandal that saw its Vice Chairman Lee Jae-yong jailed last year.

Although demand for its memory chips remains robust, the market for its smartphones appears to have hit a wall, prompting the company to search for fresh growth opportunities.

"Samsung expects innovations powered by AI technology will drive the industry's transformation, while the next-generation 5G telecommunications technology will create new opportunities in autonomous driving, the Internet of Things [IoT] and robotics," the company said in a statement.

The $22 billion is part of a total of 180 trillion won ($161 billion) that the group plans to invest over the next three years across its businesses, with more than 70 per cent of the money to be spent in South Korea.

Samsung will also expand investments in manufacturing hubs, seeking to increase production of semiconductors and display screens as well as dominate new markets by developing technology to power self-driving cars.

"Today's announcement shows Samsung is serious in its efforts to develop new growth engines" at a time when its semiconductor business and mobile sector are both facing mounting competition from Chinese rivals, Greg Roh of HMC Securities & Investment told AFP.

The company said it expected to add 40,000 new jobs over the next three years, in news that will likely bring relief to South Korea's government which is currently struggling with high youth unemployment.

 'Begging for investment' 

The announcement came two days after South Korean Finance Minister Kim Dong-yeon met the group's de-facto head Lee, calling for Samsung to create new jobs and boost the economy.

Samsung's second quarter profit dipped slightly to 11.04 trillion won, down from 11.05 trillion won a year earlier.

Total sales for April-June fell 4.1 per cent year-on-year to 58.48 trillion won, with revenues for the company's mobile division plunging 22 per cent in the same period.

The company has been fighting off competition from Chinese rivals including Huawei, which last week said it could replace Samsung as the world's top smartphone maker by late next year, after data showed it surpassed Apple for the number-two spot in a tightening global smartphone market.

Investors greeted Wednesday's news with cautious optimism, with Samsung Electronics' shares rising 0.21 per cent to close at 46,800 won.