Samsung Group (SAMZ), South Korea’s largest industrial group, said it will boost spending to a record 47.8 trillion won ($41.7 billion) this year to continue growth in its chip and display businesses.
The investment by Samsung Electronics Co. (005930), the world’s largest maker of computer-memory chips, and its affiliates represents a 12 percent increase from last year, the group said in an e-mailed statement today. The companies will spend 31 trillion won in capital expenditure, according to the statement. It didn’t give details on how the money will be allocated.
The investment may help further cement Samsung’s leadership in electronics at a time when competitors have cut spending amid slowing growth in the global economy. More than 70 percent of the group companies’ planned capex probably will be spent by Samsung Electronics, with a focus on mobile-phone chips and next-generation displays for phones and TVs, said Song Myung Sup, an analyst at HI Investment & Securities Co. in Seoul.
“They are looking at the future,” Song said. “They are turning their focus to areas that are growing rapidly.”
Samsung Electronics shares gained 0.6 percent to 1,036,000 won at the close of trading in Seoul, while the benchmark Kospi index rose 1.8 percent.
Today’s announcement follows comments by Samsung Electronics Chairman Lee Kun Hee earlier this month that the company needs to continue expanding investment and hiring.
Samsung companies, whose 2010 sales were equivalent to one- fifth of South Korea’s gross domestic product, plan to add 26,000 employees this year in what will also be the group’s largest-ever hiring, it said in today’s statement.
South Korean competitor LG Group, whose units include LG Electronics Inc. (066570), said Jan. 13 it will reduce spending by 15 percent this year.
Samsung Electronics said yesterday it plans to issue its first overseas bonds since 1997 to expand production capacity at its Austin, Texas, chip factory, where processors used in mobile devices such as Apple Inc. (AAPL)’s iPhone are manufactured.
Samsung may almost double spending on its logic-chip business, which oversees manufacturing of Apple-designed A4 and A5 processors, to a record 8 trillion won this year, Shin Hyun Joon, a Seoul-based analyst at Dongbu Securities Co., said yesterday.
Operating profit at the business probably more than doubled in 2011 and may increase 82 percent this year, according to an estimate by Korea Investment & Securities Co.
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