November 22, 2024

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[THE INVESTOR] Samsung Group on Aug. 8 unveiled a whopping 180 trillion won (US$160 billion) investment plans, including 50 trillion won overseas, over the next three years in response to the government’s growing calls for the nation’s largest conglomerate to play a bigger role in economic recovery and job creation.

The record spending worth an annual 60 trillion won comes after Vice Chairman Lee Jae-yong’s first meeting with President Moon Jae-in in India last month. Ahead of the pending announcement, industry watchers had predicted the figure could exceed 50 trillion won that was announced back in 2013 under the leadership of his father Chairman Lee Kun-hee who has been bedridden since 2015. 

Samsung said most of the new investments will be injected in its key businesses such as semiconductors and displays in order to develop value-added premium products and further widen gaps with runner-ups, especially those of China. Sources say up to 40 trillion won could be spent on building a new chip plant within its production complex in Pyeongtaek, Gyeonggi Province.

Samsung said about 25 trillion won will be earmarked for futuristic technologies like artificial intelligence, 5G network and autonomous driving that are closely linked to its current chip and electronics businesses, along with its burgeoning biopharmaceutical business.

It plans to attract more than 1,000 talents into its AI research lab in Korea; secure leadership in the 5G network-related equipment and device market; and speed up its automotive parts business for connected cars, including driverless vehicles.

The group especially pinned high hopes on its bio business, including biosimilar development and contract manufacturing, with aims to nurture the “next semiconductor” business as its key growth engine. Samsung BioLogics, established in 2011, is the world’s third-largest contract drug manufacturer.

Samsung said investing 130 trillion won in Korea alone could help create an additional 700,000 jobs across industries. Adding to that, the group said it would more than double its direct hiring to some 40,000 people in the next three years.

“The new investment plans have already been approved by the board of directors across affiliates in order to seek a win-win with other small and medium enterprises and young people for the nation’s sustainable growth,” a Samsung official said.

Now keen attention is being paid to whether the mega investment plans could soothe the sour relationship between Samsung and the government since the liberal president whose key campaign pledges include chaebol reforms took office in May last year.

After being freed from prison early this year, the Samsung heir returned to the management but maintained a low profile mostly staying abroad for business meetings. It is only recently that Lee has started activities in Korea, including his first meeting with President Moon last month when Samsung opened a new smartphone plant in India.

On Aug. 6, he also met Finance Minister Kim Dong-yeon for the first time. Sources say Samsung had planned to announce the investment plans during the meeting but the plans were ditched at the last minute because the government reportedly didn’t want to give an impression that it was arm-twisting Samsung to spend big amid its heightened scrutiny against the nation’s top business groups.

By Lee Ji-yoon (jylee@heraldcorp.com)