Korean electronics giant is to invest over 10 trillion won ($9.3 billion) on research and development in an attempt to enhance its global competitiveness in the electronics, semiconductor and mobile phone industries, allocating funds to developing software within the company, Yonhap News reveals.
The company is said to have already invested nearly 5 trillion won in research and development in the first half of the year, accounting for 6.5% of its sales, with expenditures expected to increase in the coming quarter. Samsung spent 9.4 trillion won in 2010, with sources believing it will surpass 10 trillion won by the end of the year.
Samsung has an established record of R&D investment, controlling 100,542 patents worldwide at the end of last year. Of its huge number of patents, 4,551 were registered in the U.S, placing the company second behind IBM in terms of patents secured in a 12-month period. Samsung has been placed in the patent race in the North American market for five years in a row.
Despite this, Samsung still finds itself defending itself in the face of legal action from smartphone rivals Apple, which accuses the Korean vendor of copying the design of its iPhone and iPad products, securing injunctions on sales of three of Samsung’s smartphones and the Galaxy Tab 10.1 in both Europe and Australia.
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Samsung’s Competitiveness in 2012
ReplyDeleteSamsung Electronics’ wide product line-up ranges from set products to components, encompassing semiconductor, TV, and LCD and LED display. In the global market, it has been presenting a successful growth in a tough business environment. For this reason, Samsung can be referred to as the benchmark for companies in development of successful business strategies.
Samsung’s sales reached a new high in 2011 despite recession in the IT industry. It recorded KRW 165 trillion in sales which increased KRW 10 trillion from 2010.
Each of communications, semiconductor and TV business presented a strong performance, driving the sales increase. Its mobile handset production surpassed 300 million units last year. In particular, smartphone shipments reached 100 million of which Galaxy series made a large contribution. The semiconductor segment continues to be the cash cow for the company with improved product mix although DRAM price fell to a record low. The digital media and home appliance business tripled in profit earnings thanks to the popularity of LED TV.
Samsung’s TV business enhanced profitability by being focused on premium LED TV products and the communications business posted a new record in terms of shipment by strengthening smartphone product line-up.
Despite the successful results, Samsung is placed under pressure to seek new growth engines because its current business structure is faced with various challenges and it needs to maintain a steady growth. To achieve the goal, Samsung will make a huge investment in five strategic businesses by 2020. In line with that, corporate restructuring has been conducted through merger, creation of new business segments and separation since July 2011.
Samsung’s restructuring efforts has three goals: first, to fill the entire product line-up with world-best products; second, to improve relations with the global partners including Sony and Apple; and, third, to shift its paradigm to a ‘Software Driven Company.’ In 2012, corporate restructuring will be focused on separation of set product business and component business, enhancement of competitiveness in software and content businesses, and preparation for future businesses. It is expected that Samsung Electronics will evolve into a new company when restructuring is completed. On the other hand, businesses struggling with low profitability due to aggravating business environment or immature market demand will be integrated with others for an efficient management. For instance, LED display business was integrated into component business on April 1, 2012 and LCD display will be merged with SMD to concentrate on OLED display production.