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According to a new report, South Korea’s top four business groups – of which Samsung and LG are among them – have made as much as an 80-percent increase in profits in recent times, yet paradoxically are investing an average 10-percent into R&D. Business Korea cites data from the Financial Supervisory Service (FSS) which looked at the industry leaders: Samsung Electronics, Hyundai Motor, SK Hynix, and LG Electronics. Samsung is quoted as having spent 16.81 trillion won – roughly $15.91B – on R&D, with most of that cash going towards televisions and semiconductors. This represented a 13.6-percent increase over what was invested last year during the same period. LG Electronics spent 4.03 trillion won – roughly $3.82B – on R&D which represented a 3.9% increase over the previous year; most of the money went to televisions and washing machines, however, components for self-driving cars were also mentioned. This news concerns industry analysts who feel the R&D investment allocation should be more proportional to the growth seen by the companies, especially as competition on all consumer electronics segments heats up in China.
While Samsung has largely been enjoying its prime time to shine in recent years thanks in part to the massive success of its Galaxy brand of phones and tablets, the company is not without its fair share of scandals, including the Galaxy Note 7 recall fiasco as well as, more recently, legal trouble for its top brass. Equally concerning is the fact that reports are now emerging that suggest the Galaxy S9, released last month, is not performing as expected which may result in an earlier than planned release date for the Galaxy Note 9. Where Samsung plans to go for growth in the future is also somewhat unknown: the company had plans to increase OLED production yet a new report indicates that it may have overstock due to lower-than-expected sales of the iPhone X. The Korean conglomerate has still yet to produce the foldable tablet product it has been hinting at for ages. By spending more money on R&D, the company can more sufficiently cement its future success.
LG meanwhile has been making profits, despite the continued failure of its mobile division to do so. A recent report found that just one quarter in the past two years had been in the black, with the company’s bottom line overall being salvaged by its non-mobile industries. LG continues to make industry-leading OLED televisions, however as more and more people use their smartphones or tablets to consume media, television in and of itself may hold less long-term appeal.