Samsung, Hyundai, Lotte, Hanwha announce W588tr investment plans

May 25, 2022, 07:58 am

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Lee Jae-yong, vice chairman of Samsung Electronics, steps onto the podium to make a welcome speech for President Yoon Suk-yeol and U.S. President Joe Biden at the company’s plant in Pyeongtaek, Gyeonggi Province, on May 20, 2022./ Source: Yonhap News

AsiaToday reporter Hong Sun-mi

Samsung Electronics, Hyundai Motor, Lotte Group, Hanwha and other major South Korean conglomerates announced their mega investment plans Tuesday that worth nearly 588 trillion won (US$464.8 billion).

Among the investments in future growth areas such as semiconductor, biopharmaceuticals, future cars, and aerospace, the amount invested in South Korea accounts to 82 percent, or about 480 trillion won (US$379.4 billion). Most of the investments announced Tuesday by major conglomerates are planned to be carried out over the next five years, and were made in line with the inauguration of the Yoon Suk-yeol government.

The move came after the Yoon government revealed that it would strengthen support for companies in order to create an environment where they can engage in “dynamic economic activities.”

The series of investment plans can also be seen as a move emphasizing that companies are taking the lead in revitalizing the industry by making huge investments at home as well as their investment in the United States that were highlighted during the Korea-U.S. summit last week.

Samsung said it will invest 450 trillion won (US$355.7 billion) in semiconductor and biopharmaceuticals for the next five years, and create 80,000 new jobs until 2026. Over 90 trillion won (US$71.1 billion) is invested in promising projects every year for five years. The company said it will spend 360 trillion won, or 80 percent of the investment, domestically.

The planned investment is up 120 trillion won (US$94.8 billion) from the total 330 trillion won (US$260.8 billion) the company invested over the past five years.

Based on the investment, Samsung aims to become a ‘chip superpower’ and make the bio business the second most important pillar of its future growth.

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U.S. President Joe Biden and Hyundai Motor Group Chairman Chung Eui-sun shake hands after his speech in Seoul on May 22, 2022. In a meeting with Biden, Chung announced that the automaker will invest an addition $5 billion in the United States for robotics and autonomous driving software development by 2025./ Source: Yonhap News

Hyundai Motor Group said it will invest 63 trillion won (US$49.8 billion) in its domestic businesses by 2025. Out of 63 trillion won, Hyundai Motor, Kia and Hyundai Mobis will invest a combined 16.2 trillion won in electric and environment-friendly vehicles, 8.9 trillion won in future growth drivers such as robotics, and the remaining 38 trillion won in performance improvement of the existing businesses and services.

Previously, Hyundai Motor Group announced a plan to invest a total of US$10.5 billion in the United States last week during Biden’s Seoul visit. The five-fold additional investment announcement came two days later.

Hanwha and Lotte also announced that they will invest 37.6 trillion won (US$29.6 billion) and 37 trillion won (US$29.2 billion), respectively, over the next five years. Hanwha will spend 4.2 trillion won (US$3.3 billion) in energy sector, and 2.6 trillion won (US$ 2 billion) in defense and aerospace sectors. Of the 37.6 trillion won, it will spend 20 trillion won (US$15.8 billion) domestically. The company said it will create more than 20,000 new jobs.

Lotte said it will invest 37 trillion won (US$29.2 billion) domestically. It plans to spend 1 trillion won to build a factor for its drug outsourcing business known as the contract development and manufacturing organization (CDMO), and spend 8.1 trillion won for its distribution business.

SK Group is also expected to announce a large investment and employment plan soon.

“The latest investment by companies is meaningful since there has been no substantial corporate investment,” said Sung Tae-yoon, an economics professor at Yonsei University. “Investment is important to solidify the economic and security alliance with the United States and to achieve substantial results to take a leap forward.”