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Conglomerates spent more on R&D this year despite pandemic

Samsung Electronics invested W16tr in R&D, Naver spent most in proportion to sales

Samsung Electronics (Yonhap)
Samsung Electronics (Yonhap)
Faced with growing market uncertainties stemming from the pandemic, large companies in South Korea expanded their research and development investment to secure future growth engines. Samsung Electronics and Naver led the way, data showed Wednesday.

According to an analysis conducted by Seoul-based corporate tracker CEO Score of 217 of the nation’s top 500 companies by revenue, the companies’ total aggregate R&D spending came to 40 trillion won ($36 billion) from January to September.

It was up 2.03 percent from the same period last year. Their revenues totaled 1,178 trillion won, down 4.85 percent year-on-year.

By company, Samsung Electronics spent the most in R&D. The tech giant spent 15.8 trillion won, which is 9.07 percent of its cumulative sales of 175 trillion won. It was followed by LG Electronics, SK Hynix, Hyundai Motor, LG Display and Kia Motors, which all invested more than 1 trillion won.

The corporate tracker said the ratio of R&D to sales of the surveyed companies also rose 0.23 percentage point to reach 3.4 percent this year.

The number of companies that spent more than 1 percent on R&D in proportion to sales increased from 92 last year to 96 this year.

Naver topped the list, by spending more than 25 percent. The search giant invested 967 billion won in research and development out of the sales of 3.7 trillion won.

Companies in pharmaceutical and service industries also ranked high. Hanmi Pharmaceutical and game developer Netmarble spent more than 20 percent of their sales on R&D while drugmaker Celltrion and game company NCSoft spent more than 15 percent.

By industry, information technology, electronics and pharmaceutical companies have greatly expanded their R&D investment. The R&D investment in the IT and electronics industries stood at a combined 24 trillion won, up by 463 billion won on-year. The petrochemical industry increased by 264 billion won to reach 1.9 trillion won.

Automobile, auto parts, household goods and petrochemical companies have increased their R&D investment despite falling sales. The investment by automobile and auto parts was a combined 5.3 trillion won, up 100 billion won.

Not all companies were able to afford big spending, however.

The R&D costs of the shipbuilding, machinery and equipment industries decreased by a combined 163 billion won from a year ago, the largest decline among other industries. The costs for services, public enterprises, steel, construction and building materials also decreased by more than 10 billion won, respectively.

Nineteen companies, including Posco International, Kolon Global, Hyundai Engineering, Posco Energy, GS Retail and SK Incheon Petrochem, spent less than 0.1 percent on R&D in proportion to sales.

By Shin Ji-hye (shinjh@heraldcorp.com)
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