Samsung Electronics goes all out to secure R&D investment funds

[Photo by Lee Seung-hwan]

South Korea’s tech giant Samsung Electronics Co., which has continued to invest heavily despite significant losses in the semiconductor sector, has raked in close to 30 trillion won ($23 billion) from overseas subsidiaries in 2023, according to the latest report from the company.

According to a quarterly report disclosed by Samsung Electronics on Tuesday, the tech giant’s dividend income (based on separate financial statements) for the third quarter of 2023 amounted to 7.25 trillion won. Given that the company had dividend incomes of 8.44 trillion won in the first quarter and 13.41 trillion won in the second quarter, its cumulative dividend income for this year to date totaled 29.92 trillion won.

Most of Samsung Electronics’ dividend income comes from retained earnings of overseas subsidiaries. This “capital reshoring” can be seen as a way for the tech giant to secure investment funds amid the accumulating losses in the semiconductor sector.

Samsung Electronics also sold a stake in Dutch chip equipment maker ASML Holdings N.V. It sold an additional 0.3 percent of its ASML stake during the third quarter of the year, leaving it with just 0.4 percent at the end of the third quarter. Estimated at market value, the proceeds from the sale are around 1.34 trillion won and considering that the Korean chip maker sold 0.9 percent of ASML shares in the second quarter, Samsung’s total cash in is expected to be 4.34 trillion won.

Samsung Electronics’ move to secure these funds is interpreted as an effort to secure investment resources. The company continued large-scale investments until the third quarter of 2023, with 36.7 trillion won in facility investment and 20.8 trillion won in research and development (R&D). The ratio of R&D investment to sales for Samsung Electronics jumped to 10.9 percent in the first three quarters of the year, up from 8 percent in 2021 and 8.2 percent in 2022 respectively.