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Samsung to invest $200 bn over next 3 yrs, including M&As

Samsung will solidify its No.1 position in memory chip market, while eyeing top spot in system chip segment

By Aug 24, 2021 (Gmt+09:00)

Samsung to invest 0 bn over next 3 yrs, including M&As

Samsung Group will invest a combined 240 trillion won ($206 billion) over the next three years in its core businesses such as semiconductor, displays and biopharmaceutical products, catching up with its rivals' aggressive investment plans unveiled during the Samsung leader's absence over the past seven months.

The massive spending plan, following Jay Y. Lee's paroled release from prison on Aug. 13, is also aimed at fulfilling its role and responsibilities as the top South Korean business group by creating 40,000 new jobs at its units, Samsung said on Aug. 24. 

"This investment is aimed at taking the leadership in our strategic businesses, creating new jobs and opportunities for the next generation and building the ecosystem for coexistence," Samsung said in a statement entitled "Preparation for the post-COVID-19 future."

“Through this investment, new job creation and coexistence efforts, Samsung will revitalize the South Korean economy and society and live up to national expectations and wishes for us."

The planned investments will be made by its major units, including Samsung Electronics Co., Samsung Biologics Co., Samsung Display Co., Samsung SDI Co. and Samsung Electro-Mechanics Co. 

The spending plan represents a 33% increase from its previous spending of 180 trillion won between 2018 and 2020. (Click here to see a summary of the investment plan.)

Of the total of 240 billion won earmarked for new investment, it will pour 180 trillion won into its domestic operations and facilities, on top of its investment of 130 trillion won made at home between 2018 and 2020. 

"We will aggressively pursue M&As to strengthen our technology and market leadership," said a Samsung Group official. 

While sitting on cash reserves of close to $100 billion, Samsung has been absent from the M&A market since its $8 billion deal in 2017 to acquire Harman, a US electronics systems maker for automobiles.

Samsung Electronics Vice Chairman Lee served 18 months of his 30-month prison term for a bribery and embezzlement conviction before he was released on Aug. 13.

President Moon Jae-in said his parole was decided on in the national interest, addressing expectations that Lee's release from prison will help the country's largest conglomerate push ahead with new investments and M&As.

SEMICONDUCTOR, BIOLOGICS

Samsung said it will maintain its absolute superiority in the memory chip segment by developing next-generation chips. It is now aiming to become the leader in the system chip market where it is currently a distant follower with just a single-digit market share.

To do so, Samsung plans to bring forward the production of 3-nanometer system-on-chip and smaller system chips.

"With semiconductor chips emerging as core parts of automotive and other manufacturing industries beyond electronic gadgets, competition in the semiconductor market is evolving into power struggles between countries," Samsung said in the statement.

The US and Europe are stepping up policy efforts to nurture their homegrown chipmakers, while Intel Corp. and Taiwan’s TSMC are bulking up their semiconductor investments, piling further pressure on Samsung.

Since the COVID-19 outbreak, the biopharmaceutical industry has become a strategic industry and pivotal to a country’s competitiveness, it added.

Samsung Biologics Co. and Samsung Bioepis Co. will expand their respective businesses as a contract development and manufacturing organization (CDMO) and biosimilar maker into vaccines and next-generation treatments.

"By strengthening our biosimilar and CDMO businesses, we will repeat the success story we wrote for the semiconductor industry in the biopharmaceutical sector," Samsung noted.

JOB CREATION

The 40,000 new jobs to be generated by the new investment are more than the previously planned 30,000 new hires over the next three years. Most of the new positions will be created for high-tech businesses.

Additionally, the new investment will likely create additional 560,000 positions at their suppliers and other relevant companies, according to Samsung.

Samsung will continue to hire new employees under its group-wide mass recruitment process, whereas other South Korean conglomerates have shifted into year-round flexible recruitment programs. Samsung was the country's first business group to introduce a biannual massive recruitment program.

To nurture future talent, Samsung has earmarked 350 billion won for education-related programs over the next three years, including financing R&Ds of academic institutions and establishing new departments in universities related to the semiconductor and telecommunications industries.

To align with the government's initiative for balanced growth, Samsung will also provide various programs to help small and medium-sized businesses upgrade their manufacturing capabilities.

"These investment plans will further address Vice Chairman Lee's management philosophy for coexistence and sharing (with small businesses). We will redefine the roles of companies and the sphere of their responsibilities," said a Samsung Electronics official.

Write to Hyung-suk Song at click@hankyung.com

Yeonhee Kim edited this article.

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