Samsung keeps making huge chip R&D investments despite falling operating profit

Samsung's operating profit dropped by 96.6% in Q1 2023. The company experienced the worst quarterly operating profit decline in 14 years, and one of the primary factors was a severe semiconductor industry downturn. But despite this poor performance due to the market's decline, Samsung recently confirmed that it will not slow down R&D investments and increase R&D wafer input to “gain the upper hand in technology for future products.”

Kye Hyun Kyung, the head of the Samsung Device Solutions Division overseeing global operations of the Memory, System LSI, and Foundry business, said in a recent interview that Samsung “achieved the biggest montly sale of DRAM and NAND flash,” but because of a very steep decline in prices, the company's operating profit declined. The CEO added that Samsung “will take active measures […] to deal with the drastic deterioration.” (via The Korea Herald)

As a result, even though Samsung suffered its worst quarterly operating profit decline in 14 years, the CEO confirmed that Samsung doesn't plan to change its capital expenditure strategy but will continue to bolster R&D in preparation for the future.

Samsung invested 10x its operating profit in Q1

As the adage goes, “the proof is in the pudding,” and sure enough, Samsung seems determined to continue investing in semiconductor technologies despite the market slowing down as much as it did. Even though the company posted 640 billion won ($477 million) in operating profit in Q1 2023, Samsung also invested more than ten times that sum — a record 6.58 trillion won ($4.9 billion) — in R&D during the same first quarter of the year.

In addition, Samsung also made a record investment of 10.7 trillion ($7.9 billion) won in its manufacturing equipment and facilities. At the same time, due to waning demand and prices falling, Samsung also decided to cut memory production to avoid oversupply. Nevertheless, the company is preparing for demand to pick up eventually. And once that happens, the tech giant wants to be at the top of the game with superior technological prowess and production capabilities.

Mihai Matei - Senior Editor

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First Samsung device: SGH-A800

Mihai is a blogger and column writer at SamMobile. His first Samsung phone was an A800 which took a lot of beating, and a part of him still misses the novelty of the clamshell design. In his free time, he enjoys watching shows, documentaries, and stand-up comedy; listening to music, taking walks, and occasionally playing old(er) video games.

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