Chinese brands have taken a bite out of Samsung’s revenue across product categories in recent years, raising concerns over the tech giant’s future. The growing uncertainty has forced the Korean company to search for new growth avenues by spending heavily on R&D – spending that is large enough to place Samsung as one of the top R&D spenders globally.
The trend in 2019 seems to be no different, with Samsung spending a record $8.4 billion on R&D during the first six months of the year, according to the company’s financial report. This amounts to an increase of 12.2% when compared to the R&D expenditure from the same period last year. The company’s R&D spending as a proportion of sales also hit a new high at 9.3%.
It is difficult and impractical to gauge returns on R&D in the short-term as it takes years, if at all, for these investments to translate into revenue-generating products. However, registered patents are a good indicator to measure the interim success of a company’s R&D efforts. Samsung has done exceedingly well in this area by securing 1,473 patents in South Korea during H1 2019, which is over 70% of its total patents from its home country last year.
By the end of June, Samsung had a total of 132,478 patents in its portfolio – 40% of which were registered in the US, 20% in Europe, and 17.8% in South Korea. According to a report from the Intellectual Property Owners Association, Samsung Electronics ranked second in total patents registrations in the US in 2018 with 5,836 patents, trailing behind only IBM’s total of 9,088 patents. Most of these patents are related to smartphones, memory chips, televisions, etc.