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Samsung Group, the South Korean giant known as a consumer electronics maker and shipbuilder, has announced that it will invest $206 billion in strategic businesses, semiconductors, biopharmaceuticals, artificial intelligence, and robotics, in this and each of the next two years.
It says that the new investment will create 40,000 new jobs over the three year period.
The company called this both a program of “aggressive investments” and a “survival strategy,” contending that if it doesn’t grow in these strategic areas it will make itself vulnerable.
The biopharmaceutical investment will allow two biopharma units within the Samsung Group to get into the contract manufacturing of vaccines as well as cellular and gene therapy products.
A biopharmaceutical push is not a new idea in Samsung’s corporate headquarters. In the late summer of 2020 it announced plans for a “Superplant,” a biopharm manufacturing site that, when complete, would be the largest of its type in the world. n
High-Performance AI Algorithms
The Samsung Group also plans to apply high-performance AI algorithms to more smart devices. Samsung is already one of the first prominent chip makers to use AI in the manufacture of its chips.
The software for its chip-making AI comes from Synopsis (NASDAQ: SNPS), a company founded in North Carolina (Research Triangle Park) in 1986 and now based in San Francisco.
The chairman of Synopsys (Aart de Geus, also a co-CEO of the company) sees his company’s relationship with Samsung as very important for both of them, saying “What you’re seeing here is the first of a real commercial processor design with AI.”
The Synopsys/Samsung relationship will likely continue through the new era heralded by Samsung’s new proposed investment. Indeed, Samsung confirmed in a recent report that it is using the AI technology on which Synopsys has been helping in its development of the next-generation Exynos processors, which will power a range of smartphones.
The Innovator’s Dilemma
The aggressive investment campaign may be seen positively as a sensible response by Samsung to what scholars of contemporary business call the “innovator’s dilemma.”
The dilemma is that successful, even very innovative companies can be threatened by disruptive innovators who find their footing by serving non-mainstream, even “fringe” competitors. The solution: successful established companies can’t keep acting like successful established companies.
They need to keep redefining themselves as the disruptors.
Samsung has been in many respects a very innovative company, sometimes in fields one may not associate with its name, including fintech. But not all innovation is disruptive, and innovation that comes too naturally to the innovator can be part of the trap.
Is it Simply a Distraction?
A less charitable interpretation of Samsung’s announced investment plans is: distraction. The announcement, after all, comes only days after Jay Y. Lee was released on parole.
Lee is the co-vice chairman of Samsung Electronics, and until his imprisonment earlier this year he was its de facto leader. He is also the only son of Lee Kun-hee, who led the company for more than thirty years and passed away in October 2020. Accordingly, Jay Y. Lee is sometimes referred to as the “crown prince of Samsung” by the South Korean media.
Unfortunately, the crown prince has been serving time for embezzlement and bribery. The company would for obvious reasons like to change the subject after Lee’s very high-profile travails, and would rather discuss AI and robotics than its prince’s all-too-human frailty.
The president of the Republic of Korea, Moon Jae-In, defended Lee’s parole in a statement that emphasized the idea that Lee’s work at the head of Samsung was in the national interest, that is, that “he will help the country with respect to semi-conductors and vaccines.”