A view of Samsung Electronics’ newest smartphone Galaxy S20. (Photo: Samsung Electronics)

Samsung Electronics poured 5.36 trillion won into R&D initiatives for the first quarter of this year, the biggest-ever R&D outlay on a quarterly basis. The large investments come despite the global COVID-19 pandemic.

Samsung Electronics’ R&D outlays in Q1 surpassed the previous record high of 5.32 trillion won in the fourth quarter of 2018.

A look into Samsung Electronics’ quarterly R&D outlays showed that the company spent more than 4 trillion won in six quarters between 2017 Q2, when the company spent 4.08 trillion won, and 2018 Q3 when it invested 4.56 trillion won.

Samsung Electronics had invested more than 5 trillion won for the fourth consecutive quarter since 2018 Q4, when the company spent 5.32 trillion won.

The company earmarked 5.04 trillion won in 2019 Q1, 5.09 trillion won in 2019 Q2, and 5.16 trillion won in 2019 Q3.

Due to the sagging semiconductor business, Samsung Electronics’ R&D outlays dropped to 4.82 trillion won in 2019 Q4 before rebounding to more than 5 trillion won in 2020 Q1. The portion of R&D outlays to sales rose to 9.7 percent in 2020 Q1, up 9.6 percent in the same period last year.

Samsung Electronics spent 20.192.9 trillion won in annual R&D outlays last year, topping 20 trillion won for the first time. The company saw the portion of R&D outlays to sales rise to 8.8 percent, up 1.1 percentage points, from 7.7 percent in a year ago.

Even though the economic fallout, caused by the COVID-19 pandemic, is predicted to be reflected in the second quarter of the year, the company’s R&D outlay is forecast to top 20 trillion won in the whole of the year.

At its general shareholders’ meeting, held in March, Samsung Electronics revealed a plan to invest R&D expenditures as planned despite the COVID-19 pandemic.

Samsung Electronics’ Q1 Business Performance

Samsung Electronics posted 55.33 trillion won in sales and 6.45 trillion won in operating profit in the first quarter of the year on a consolidated basis.

Q1 sales declined 7.6 percent compared to the previous quarter due to the sagging display and consumer electronics businesses and some businesses, buffed by the COVID-19 pandemic, and they increased 5.6 percent over the same period a year ago on the back of a rising demand for servers and PC parts.

Despite the improving performance of the memory business over the previous quarter, Q1 operating profit dropped 0.7 trillion won due to causes of declining sales, but it increased 0.2 trillion won compared to the same quarter a year ago on the back of the improving of mobile product portfolio and continued diversification of small- and medium-sized OLED customers.

The semiconductor business saw Q1 operating profit improve compared to the previous quarter on the back of a solid demand of servers and PCs and continued mobile demand and that for the system semiconductor segment increase thanks to expanding mobile parts supplies for corporate consumers.