Samsung’s $44 billion capital expenditure dwarfed all public companies last year
According to a piece in the WSJ, Samsung spent a total of $44 billion last year to emerge as the biggest spender of all public limited companies last year. It is extremely improbable that any privately held company spent more than that sum, which makes Samsung probably the biggest spender of all companies last year.
The WSJ post states that Samsung’s spending is about 50% more than the next biggest spender, PetroChina (~$29 billion). It is also more than the combined spending by Royal Dutch Shell and Exxon Mobil – two enormous oil and gas companies. It is staggering to think that a tech company is spending more than the oil and gas companies, and points to a shift in the global economy where tech companies are taking center stage in investments, innovation, and influence.
More investments in component business
A big chunk of Samsung’s capital expenditures went into building or expanding manufacturing facilities for semiconductors, displays, and other products, with Samsung trying to maintain the momentum it gained in the last couple of years. While Samsung’s consumer devices get most of the public attention and press coverage, it is the company’s component business that is adding heavily to the bottom line.
Samsung’s semiconductor business has grown rapidly in the last couple of years. In 2017, Samsung dislodged Intel to become the world’s largest chipmaker, ending Intel’s 24-year-reign. Samsung’s display business has also seen impressive growth by being the only supplier who can cater to Apple in terms of quality and scale. Through more investments in these businesses, Samsung is trying to maintain its lead and influence in the global tech supply chain.
With tech giants investing heavily in IoT and Al, demand for components required to build and power them continues to grow. By increasing investments in their component businesses, Samsung is positioning itself to make the best use of the opportunity. Furthermore, Samsung is not just banking on other tech companies and waiting for the proliferation of the IoT devices. The consumer side of the business is aggressively pursuing a strategy to birth and lead the IoT era.
At CES 2018, Samsung’s desire to build a huge and smart ecosystem of connected devices was clear, with its efforts to brings SmartThings and Bixby everywhere. If the company can accomplish that and trigger an IoT revolution, Samsung will not only be owning a successful IoT platform and selling millions of IoT devices, the company will also provide components to most other companies willing to make and power IoT devices.