[Top 100 Companies Report]④Samba R&D Investment Surges 191%... SK Biopharm Pours Half of Sales into R&D

SKC "Part of the Process of Transitioning to a Holding Company"
Top 100 Companies' R&D Investment Increased by 14% Last Year
Samsung Electronics Has the Largest Amount
SK Biopharm Invests Half of Sales in R&D
POSCO International's R&D Investment Virtually '0'

Last year, the company that spent the most on research and development (R&D) was Samsung Electronics. Its R&D expenditure was about five times higher than that of SK Hynix, which ranked second. The company with the highest R&D expenditure growth rate compared to 2021 was Samsung Biologics. In addition, companies in the secondary battery and bio sectors, which are gaining attention as future industries, showed strong commitment to R&D.

According to a comprehensive survey by Asia Economy on the R&D expenses of the top 100 companies by market capitalization (excluding 21 companies such as securities firms), the total R&D expenditure last year was 61.302964 trillion KRW. This represents an approximately 14% increase from 53.799188 trillion KRW in 2021.

Excluding Samsung Group affiliates (Samsung C&T, Samsung Biologics, Samsung SDS, Samsung Engineering, Samsung Electro-Mechanics, Samsung Electronics, Samsung Heavy Industries, Samsung SDI), the total R&D expenditure last year was 33.74562 trillion KRW. This is a 15% increase compared to the previous year (29.195919 trillion KRW). This result appears to be influenced by Samsung Electronics, which invests the most in R&D among the top 100 companies, increasing its R&D expenses by only 10.32% compared to 2021.

The company that invested the most in R&D was Samsung Electronics. It invested 24.929171 trillion KRW in research and development last year alone. Although the investment amount was the highest, the growth rate compared to 2021 was 10.32%, which is relatively low compared to the overall average of 15%. SK Hynix ranked second with 4.905334 trillion KRW, showing a 21.28% increase compared to 2021.

Following them were electronics and automotive companies such as LG Electronics (4.036969 trillion KRW, 13.01%), Hyundai Motor Company (3.340589 trillion KRW, 7.76%), LG Display (2.43159 trillion KRW, 14.28%), Kia (2.16295 trillion KRW, 15.55%), Naver (1.809073 trillion KRW, 9.31%), LG Chem (1.779996 trillion KRW, 27.97%), Hyundai Mobis (1.372668 trillion KRW, 17.39%), and Samsung SDI (1.076353 trillion KRW, 22.64%). The average R&D expenditure growth rate of these companies compared to 2021 was around 15%. LG Chem had the highest growth rate, while Hyundai Motor Company had the lowest.

The company with the highest R&D expenditure growth rate compared to 2021 was Samsung Biologics, an affiliate of Samsung Group. Samsung Biologics invested 268.2 billion KRW in R&D last year, a 191.84% increase from 91.9 billion KRW in 2021. The second highest was battery materials company L&F, which increased its R&D expenses from 12.168 billion KRW in 2021 to 33.592 billion KRW last year, marking a 176.07% growth. Third was BGF Retail (9.843 billion KRW, 104%).

Samsung C&T ranked fourth with 383.597 billion KRW, increasing its R&D expenditure by 185.262 billion KRW compared to 2021, showing a 93.41% growth rate. The R&D expenses of these two companies influence each other. Samsung Biologics is a listed subsidiary of Samsung C&T. In other words, when Samsung Biologics' R&D expenses increase, Samsung C&T's expenses also increase in accounting terms. Samsung views the bio sector as a future growth engine and is investing generously. Over the next ten years, it plans to invest 7.5 trillion KRW to establish a 'Second Bio Campus' in Songdo, Incheon.

Research and development in secondary batteries (batteries), which are gaining attention as future businesses, is also active. Among the top 10 companies with the highest R&D expenditure growth rates compared to 2021, three companies (L&F, POSCO Future M, and EcoPro) are engaged in the secondary battery business.

The companies with the highest ratio of R&D expenses to sales are bio and IT companies. SK Biopharm ranks first, reinvesting nearly half (49.98%) of its sales into R&D. Following are Pearl Abyss and Netmarble, which invest about one-third of their sales into R&D.

Companies that are passive in R&D activities include general trading companies and distribution firms such as GS Retail and POSCO International. This seems to reflect the industrial characteristics, as they do not directly develop products. POSCO International's R&D expenses last year were 1.475 billion KRW, which is the cost incurred by the R&D organization under its subsidiary POSCO Mobility Solutions. The ratio of R&D expenses to sales was 0.00% last year as well as in 2021 (rounded to three decimal places).

A total of 13 companies reduced their R&D expenses last year. The company with the largest decrease was SKC. Its R&D expenses dropped from 21.447 billion KRW in 2021 to 7.978 billion KRW last year. This was due to SKC's transition to a holding company after selling its film business division. As a holding company managing affiliates, it no longer has R&D functions.

Next, LG CNS reduced its R&D expenses by 19%, from 83.18 billion KRW in 2021 to 67.315 billion KRW last year. An LG CNS official stated, "There was an increase in investment for platform development costs released earlier this year in 2021, so last year's figures decreased to some extent. Other core technology-related R&D such as cloud, AI, and big data continues steadily." Earlier this year, the company launched SingleX, a software-as-a-service (SaaS) for enterprises.

KT&G ranked third in terms of decrease, spending 56.023 billion KRW on R&D last year. Although this is about 1 billion KRW more than 55.125 billion KRW in 2020, it is a 16.95% decrease compared to 67.453 billion KRW in 2021. A KT&G official explained that this was because temporary R&D expenses for new export product development were invested in 2021.