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Samsung spends big on R&D despite weaker profits

Industry 09:05 May 17, 2019

SEOUL, May 17 (Yonhap) -- Samsung Electronics Co.'s spending on research and development (R&D) hit a near-record high in the first quarter of this year, despite a plunge in earnings, company data showed Friday.

The global tech juggernaut's R&D expenditures stood at 5.04 trillion won (US$4.24 billion) in the January-March period, according to the company's quarterly report.

It is slightly lower than the all-time high of 5.32 trillion won set in the last quarter of 2018, but it marks the second straight quarter that Samsung's R&D spending has topped the 5 trillion-won mark.

Samsung's R&D spending, which came to around 3 trillion won, reached the 4 trillion-won range for the first time in the second quarter of 2017.

Samsung's big R&D spending came as the company suffered an earnings shock in the first quarter due largely to falling chip prices.

Samsung spends big on R&D despite weaker profits - 1

Samsung's operating profit tumbled 60.1 percent on-year to 6.2 trillion won, with sales sinking 13.5 percent to 52.4 trillion won.

The ratio of Samsung's R&D spending to sales amounted to 9.6 percent in the first quarter, up 7.7 percent from all of 2018, due mainly to an on-year fall in its top line.

In light of the current pace, Samsung's R&D spending for all of 2019 is widely tipped to hover above last year's 18.7 trillion won and surpass the 20 trillion-won mark for the first time.

Industry watchers expected Samsung's R&D spending to keep rising for the time being, given its plans to invest big in its non-memory and foundry business, as well as artificial intelligence and other future growth engines.

The data also showed Samsung obtained 1,673 patents from the United States and 801 from South Korea in the first quarter of this year.

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