Quote: "Samsung Electronics Co. (005930)s capital expenditure dwarfs that of competitors and has helped make it the worlds biggest maker of TVs, memory chips and flat-screen panels. Record spending this year may further pressure rivals.
Samsung and its affiliates plan to spend 47.8 trillion won ($42 billion) this year on new product research and upgrading plants, the group said this month. The Suwon, South Korea-based company, which reports full-year earnings tomorrow, spent more than Sony Corp. (6758), Intel Corp. (INTC) and Cisco Systems Inc. combined in 2010, according to data compiled by Bloomberg.
The spending spree will enable the chips and display supplier to Apple Inc. and Sony to build on record sales last year and boost profit that doubled in the five years to 2010. That may leave competing makers, already mired in losses from a glut of commodity chips, even farther behind in their quest to diversify into the higher-margin specialty semiconductors for phones and tablets that have made Samsung so successful.
We have a Goliath in the technology industry, said Kim Hyung Sik, a Seoul-based analyst at Taurus Investment Securities Co. The gap between Samsung and the laggards will keep widening, particularly in memory chips."
Now that's what wise investment is. Samsung re-invests their profits. In return they get research (order of magnitude more patents than Apple has), manufacturing prowess (semiconductor FABs etc.) and much more. What does Apple have? A lot of hype. Imagine if the next iPhone is not popular (may happen even if it's technically OK - just because people get bored with it), what happens to Apple? What do they have?