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South Korea’s top 1,000 firms spent W50tr on R&D last year

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Eight conglomerates’ investments account for 60% of total



South Korea’s largest companies, including Samsung, Hyundai and LG, spent more on research and development and earned more in 2018 compared to the previous year, despite growing concerns about the slowing global economy, according to a local public institute on Monday. 

According to a new report released by the Korea Institute for Advancement of Technology under the Industry Ministry, the combined investment on research and development of 1,000 companies amounted to 49.7 trillion won ($42.5 billion) in 2018, up 7.9 percent year-on-year. The 1,000 companies are the Korean firms that made the largest amounts of R&D investments last year. 

Out of the total 49.7 trillion won, the top eight companies -- Samsung Electronics, SK hynix, LG Electronics, Hyundai Motor, Samsung Display, Kia Motors, LG Display and LG Chem -- spent a combined 30 trillion won, accounting for 60.4 percent of the total. 

Samsung Electronics made the largest investment of 15.5 trillion won. 

The nation’s largest tech giant has been spending on advanced chips, artificial intelligence, internet of things, robots, automotive electronic parts and self-driving cars. The firm’s semiannual report released in August showed it also invested 10.2 trillion won in R&D in the first half of this year, up 15.3 percent year-on-year. 

Samsung was followed by SK hynix and LG Electronics, which each invested 2.9 trillion won.

SK hynix’s R&D investment was its highest level ever last year, up 16 percent from the previous year in preparation for the revival of the memory chip market. LG Electronics is also expanding its R&D investments centering on future businesses, such as AI, robots, auto parts and premium home appliances. 

Hyundai Motor spent 2.6 trillion won and Samsung Display invested 1.9 trillion won. Kia Motors, LG Display and LG Chem spent 1.7 trillion won, 1.6 trillion won and 1 trillion won, respectively. 

Among the 1,000 companies, R&D investment in proportion to sales was 3.76 percent last year, up from 3.65 percent the previous year. Over the last decade, the ratio has steadily increased since 2009, when it was 2.62 percent, KIAT said. 

The combined operating profit of the 1,000 companies was 117 trillion won last year, up by 9.65 percent from the previous year. 

By size, large-scale R&D investment was concentrated at companies with more than 1,000 employees. Their combined R&D investments stood at 42.8 trillion won, accounting for 86.3 percent of the total investment of the 1,000 companies. 

By sector, manufacturing companies accounted for 77.2 percent of the 1,000 companies and their R&D investments stood at 44.8 trillion won, 90.2 percent. 

“It is a positive sign that the top 1,000 companies’ R&D investment, sales and operating profit are on the rise,” said KIAT President Seok Young-chul.

“Hope is seen as companies are actively investing in future investments amid growing concern about the decline in facility investment,” he said.

Published : October 29, 2019

By : Shin Ji-hye The Korea Herald/ANN