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Top Ten Groups Increase R&D Investment

Investment in research and development (R&D) of listed companies under Korea’s top ten corporate groups grew substantially this year.

According to the Korea Exchange and the Data Analysis, Retrieval and Transfer System of the Financial Supervisory Service on Aug. 21, the total 1H R&D investment of 45 listed subsidiaries of top ten Korean corporate groups that submitted their semi-annual report for this year reached KRW 13.391 trillion. This is a 19.7 percent (KRW 2.23 trillion) surge from last year’s KRW 11.1908 trillion.

Samsung Electronics showed the highest increase in R&D investment amount. The company invested KRW 7.565 trillion in R&D in the first half of this year, up by KRW 1.2767 trillion (22.1 percent↑) from the same period last year. LG Electronics (KRW 355.7 billion, 23.7 percent) had the second highest increase in R&D investment amount, followed by LG Display (KRW 151.1 billion, 22.6 percent), Hyundai Motors (KRW 64.2 billion, 9.9 percent), Hyundai Mobis (KRW 59.1 billion, 36.8 percent) and Samsung SDI (KRW 57 billion, 37.4 percent).

In terms of R&D investment growth rate, SK Communications posted the highest with 527.9 percent, as investment amount grew from KRW 1.2 billion in the first half of last year to KRW 7.5 billion the same period this year. SK Networks, Samsung Heavy Industries and Daewoo International were among the companies with a significant increase in R&D investment this year.

However, some companies spent less on R&D this year. LG Uplus invested KRW 21.8 billion in the first half of the year, a YoY decrease of KRW 13.5 billion (38.3 percent↓), and LG Hausys also reduced investment by KRW 10.5 billion (34.8 percent↓) to KRW 19.6 billion. Hyundai Steel and Korean Air also cut their R&D investment by KRW 9.7 billion and KRW 5.5 billion, respectively, and SK Broadband chopped its investment from last year’s KRW 900 million to KRW 400 million this year.

Among the 45 listed companies, 32 companies (71.1 percent) increased their R&D investment and only 13 companies (28.9 percent) reduced their R&D spending. The average R&D investment growth rate of the companies stood at 26.7 percent.

It is believed that the significant R&D investment increase is based on the judgment that the global economy’s recovery will pick up speed in the second half of the year. The U.S. economy is growing, although at a slow pace, and the Euro Zone turned to growth in the second quarter. The Japanese economy is also expected to recover, helped by Abenomix.

Kim Yoon-ki, an analyst for the Daishin Economic Research Institute, noted that companies seemed to have invested more in R&D rather than facilities to prepare for future economic conditions, and added that it was probably the right thing to do considering the current economic environment.

Source Text

Source: Yonhap News (Aug. 21, 2013)

** This article was translated from the Korean.

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