South Korea's largest industrial conglomerate, Samsung Group, said it would increase spending to a record 47.8 trillion won ($41.7 billion) this year to push ahead with growth in its chip and display businesses as also to cultivate new revenue sources. The investment by Samsung Electronics Co, the largest maker of computer-memory chips, and its affiliates represents a 12-per cent increase from last year, according to an emailed statement today. The companies plan to spend of 31 trillion won in capital expenditure, the group said in the statement. However, details on the manner of allocation have not been disclosed. According to analysts, the investment would further cement Samsung's leadership in electronics at a time when competitors were trimming spends amid failing growth in the global economy. Over 70 per cent of the group companies' planned capex probably would be spent by Samsung Electronics, as it sought it focus on mobile-phone chips and next-generation displays for phones and TVs, they say. They add, the company was looking at the future and turning its focus to areas that were growing rapidly. Samsung Electronics shares were up 0.6 per cent to 1,036,000 won at the close of trading in Seoul, while the benchmark Kospi index was 1.8 per cent. The company's investment strategy is strongly driven by investment in new technologies ahead of rivals. It is now banking on logic chips and OLED displays to repeat its stupendous success in flash chips, computer memory chips and LCD flat-screens. This is in stark contrast with its rivals who are looking at a gloomy global economic and IT spending outlook as they stick to their conservative plans. Though the business group did not provide a breakdown of the 47.8 trillion won investment, according to analysts, the company would raise investment in mobile chips and next-generation OLED (organic light emitting diode) flat-screen displays. The say Samsung had strong cash flows to make bold bets in new technologies. They add, no other IT company could beat it in terms of investment and that was how Samsung added new sources ahead of rivals and widened its gap. Capital spending by the group is expected to account for 31 trillion won, up 11 per cent from a year ago, Samsung said in a statement. Analysts expect some 25 trillion won, or 80 per cent of the capital spending, would come from Samsung Electronics, the world's biggest technology firm by revenue, with its display unit, mostly boosting capacity of system chips and OLEDs. Investment in system chips such as mobile processors and sensors used in smartphones, tablets, and cameras would likely exceed spending on its more established memory chips for the first time, touching 7.5 trillion won, or exceeding investment in memory chips by around 1 trillion won analysts say. Investment in OLED is likely rise to 7 trillion won from last year's some 5 trillion won, while the rest would go towards LCDs, rechargeable batteries and LEDs, analysts said. Samsung Electronics makes mobile processors to power Apple's iPhone and iPad as also its own Galaxy line of mobile products. Samsung Mobile Display, the display unit of the group holds a near monopoly over OLED display supplies, which find application in high-end mobile gadgets would become dominant in TV screens to replace LCD. Source: Domain-B
