Research conducted by Strategy& places Samsung as the second largest R&D spender in the world, and the largest in the consumer electronics industry. The company spends more than any of the big tech names, including Google, and no other smartphone manufacturer could even break into the top 20.
Samsung may have been suffering financial worries this year, partly due to slower sales, but also due to large increases in expenditure, particularly research and development. Samsung’s R&D costs have increased by a massive 28 percent compared with 2013. The figure also increased substantially the year before, up 15.6 percent between 2013 and 2012. The electronics giant spent an impressive $13.4 billion this year. Only Volkswagen spent a fraction more, at $13.5 billion.
Samsung has increased its R&D personnel by 27% since 2010 and now employs a total of 63,628 staff members in the department. Year over year Samsung’s R&D expenditures have been on the up this decade. R&D spending now accounts for 6.4 percent of the company’s sales revenue. This percentage is actually far lower than some of the other big tech companies, such as Intel which spends 20.1 percent of its sales on research, Microsoft which spends 13.4 percent, and Google’s 13.3 percent.
Such a large increase in expenditure bucks the wider Electronics and Telecommunications R&D trends, which on average has seen companies cut back on development spending by 1.8 and 7.5 percent respectively over the past 12 months. The top 20 companies accounted for more than 25 percent of the total spending in 2014, suggesting that the gap between larger companies and smaller innovators may be widening.
Data source: Strategy&
Perhaps we shouldn’t be so surprised that Samsung has spent so much money over the past few years and particularly this year. The company has brought out some new smartphones designs, such as the Galaxy A series which makes use of a new metallic body, released its first QHD AMOLED display, and has been bulking up its line of Exynos mobile processors. Not to mention broader expenditure for its TV, consumer electronics, and semiconductor businesses.
Of course, it’s no good spending all this money without creating products that consumers genuinely want to buy. A repeat of Samsung’s previous mobile successes has remained elusive so far this year. Perhaps this year’s surge in R&D spending is an attempt to rejuvenate the company’s mobile division.
Next year’s products will prove whetherall this extra cash has been put towards wise or poor investments.