South Korean calls for greater indigenous investment have been answered emphatically by Samsung, with huge plans for the coming years.
What company has $18.6bn burning a hole in its pocket, a thirst for control of the chip sector, and a desire to add an immense 440,000 jobs to its South Korean operation?
Samsung, of course.
Following political requests for South Korean companies to invest indigenously, Samsung’s four-year plan is such that it suggests the entirety of those jobs could be created by 2021.
The move is not entirely down to domestic political pressure, though, with shareholders also coming to the fore.
2016 was Samsung’s annus horribilis, with smartphones that went on fire and a leadership thrown into turmoil amid South Korea’s biggest political scandal in years. Therefore, investing a huge sum into the country’s economy may alleviate worries in Samsung’s home market.
Despite the recent smouldering woes at the company, though, business is good – Samsung’s financials have been improving for some time now.
After the Galaxy Note 7 was withdrawn from the market, its Q4 figures, released in January, made it seem as if the company was motoring along just fine.
That didn’t stop calls from anxious investors, though, with Paul Elliott Singer’s push for a shift into a holding company preceding the latest figures.
In April, Samsung posted its largest quarterly profits in several years, after a surge in memory chip sales and pre-orders of the Galaxy 8 smartphone.
From January to March, Samsung’s operating profit was 9.9trn won (€8bn), with revenues up 2pc to 50.5trn won (€40.1bn). The chip business was the company’s stellar performer, with a record 6.3trn won (€5bn) operating profit.
Interestingly, it is a focus on Samsung’s chip operations that will welcome this latest swathe of funding – the company invests around $10bn annually in this area.
Samsung’s income has also recently been buoyed by price gains for both DRAM and NAND memory chips, as supply growth constraints and demand for more firepower on devices, such as smartphones and servers, boosted margins.
Production of NAND microchips will be upped as part of the investment, with a separate fund allocated for a new, organic light-emitting diode display complex in South Korea, according to Reuters.
Another area of focus for the company, although not mentioned in its latest investment, is 5G, with Samsung one of a number of outfits diving into the next generation of connectivity.