Samsung makes $22.4B investment push into AI and 5G

Samsung Electronics semiconductor operations in Giheung and Hwasung, Korea. The company plans to expand its chip manufacturing facilities to meet rising demand. (Samsung)

Samsung will invest some $22.38 billion in artificial intelligence (AI) and 5G technologies in hopes of tapping into new growth opportunities for its businesses as the smartphone market stalls.

Samsung executives believe AI technologies including autonomous driving and robotics, coupled with 5G connectivity, will drive the industry’s transformation in the coming years. Samsung said it’ll expand its advanced AI researchers to 1,000 across its global network of AI facilities. The company will also “invest aggressively to become a global player in the advanced markets for 5G chipsets and related devices and equipment,” it said in a statement.

In all, Samsung is investing $161 billion over the next three years aimed at making it “a leading force in building and energizing the ecosystem of innovative businesses for the digital economy,” the company said. It’s a 6% increase in investment spending over the last three years. Roughly $116 billion of that will be spent in South Korea, Samsung said.

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With that money, Samsung plans to expand its C-Lab incubator program to include more external and internal projects and provide further software training. The company said it will also aim to become a leader in autonomous car electronics, including providing system-on-chips and display technologies for self-driving cars. It will also expand its semiconductor manufacturing hubs in order to meet new demand for chipsets in AI and 5G.

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The investment announcement comes as the company’s mobile business is suffering declines, after sales of its line of S9 phones flopped in a stagnant global smartphone market. Samsung, which is the world’s largest smartphone maker, reported revenue declines for the second quarter of 2018 due to weak sales in its smartphone and display businesses.

The company’s semiconductor business, on the other hand, delivered strong earnings in the second quarter, with revenues growing 31% year over year. Samsung’s high density memory solutions saw increased demand as AI and cloud computing platforms grow, as did its SSD storage solutions. Last year, Samsung’s semiconductor division brought in $15 billion, surpassing Intel’s revenue for the first time and toppling it as the semiconductor king.