Samsung to invest $22bn on 5G, AI and semiconductors

Slow down in smartphone sales pushes Samsung to invest in new technology for growth

Samsung has announced plans to invest 25 trillion won ($22bn) on developing technology in artificial intelligence, 5G communications and semiconductors.

It comes after the company reported slowing growth in its second quarter, when it registered an operating profit up 5.2 per cent to 14.87 trillion won on sales down by four per cent to 58.4 trillion won.

Samsung blamed the revenue fall on "softer sales of smartphones" and added that the performance of its Galaxy S9 flagship smartphone has been "slow" since it went on sale earlier this year. According to recent reports, the handset has suffered the lowest sales of any flagship Samsung smartphone since 2012's Galaxy S3, with expected shipments of 31 million units this year.

It added that the mobile market will "remain challenging" in the second half of 2018, partly due to increased competition from Huawei and Xiaomi. It also suggested that it was struggling with "weak demand" for its OLED panels.

While Samsung is planning to up investment in displays it is also looking to AI to "drive the industry's transformation" - despite the lacklustre performance of the company's Bixby personal assistant - and to "significantly expand" its research into AI. That will include investment in AI Centres in the UK, Canada, Russia, the US and, of course, South Korea.

Its semiconductor division is also in line for an infusion of investment funds as it looks to go head-to-head with Intel as the world's biggest chipmaker, albeit largely on the back of volatile sales of commodity DRAM.

The company "aims to become a leader in electronics components for future cars such as system-on-chips for autonomous driving" as well, adding that it will continue to invest in its DRAM and flash memory products.

All-in-all, Samsung expects to create 40,000 new jobs over the next three years.

"This includes generating up to 20,000 additional new jobs on top of previous hiring plans, reflecting Samsung's commitment to support youth employment," the company said.

Intriguingly, perhaps, Samsung is also looking to invest in biopharmaceuticals, claiming that it will invest "heavily" in the area, including the funding of drugs used to treat "chronic and difficult-to-cure diseases".

Pharmaceuticals, of course, is an area that typically requires major upfront investment and a lot of patience. It currently owns the not-for-profit Samsung Medical Center in Seoul, South Korea which has a research collaboration agreement with pharma giant Pfizer.

Its ambitions in this area are, perhaps, an echo, of its wide-ranging pre-Asian financial crisis ambitions. At one point, Samsung manufactured aircraft and was even planning to design and make its own vehicles. These fell by the wayside under tighter financial conditions, but the company still manufactures aircraft engines and gas turbines.