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By Kim Yoo-chul
Staff Reporter
South Korean electronics giants such as Samsung Electronics and LG Electronics have been successful in competing with their bigger overseas rivals in the global market thanks to increased research and development (R&D) expenses and massive investment. Now they are striving to maintain their initiatives with distinctive strategic products.
To tackle the ongoing ``consolidation'' moves in the highly-volatile dynamic random access memory (DRAM) chip industry to offset falling profits, Samsung Electronics has been accelerating efforts to nurture its mobile DRAM business.
Since multi-function mobile phones are gaining popularity in accordance with soaring consumer appetite for high-end handheld devices such as smart phones, demand for faster data processing chips is also gathering momentum.
The energy-efficient chip is necessary in MP3 players, PMPs, navigation systems and other consumer applications.
``Currently, we are not considering the possibility of sealing strategic partnerships with overseas rivals. We have been increasing the portion of 512-megabit mobile computer chips with 90-nanometer level to revive profits,'' a high-ranking official from the world's No. 1 DRAM manufacturer said.
According to industry estimates, the demand for mobile DRAMs will rise to 2.1 billion units by the end of this year from 390 million units in 2005.
Hynix Semiconductor, the world's second largest DRAM maker, also plans to apply the 54-nanometer technology to producing one-gigabit DDR3 DRAMs and other applications such as graphic and mobile DRAM chips from the second half of this year.
Hynix officials expect the shift to the advanced process technology will help the company cut production costs, with productivity expected to rise by 50 percent from the 66-nanometer technology it currently uses to produce one-gigabit DDR2 DRAM chips.
``What we are focusing on right now is to increase productivity with chips in large quantities. To back up such efforts, we will continue a healthy partnership with Taiwan-based ProMOS,'' a Hynix spokesperson said.
The company has been in talks with the Taiwanese rival on the transfer of a fine 54-nanometer process DRAM technology, which Samsung Electronics blasted a ``technology leak.''
The ``profitability-focused'' strategy has also been seen in flash memory-based storage architecture ― solid-state drives (SSDs).
Unlike traditional hard disk drives, SSDs highlight lower power consumption, faster booting times, increased reliability, improved performance and no mechanical noise. Due to these strengths, SSDs have been used for ultra-slim mobile PCs and aerospace industries.
Although low densities and high pricing have kept SSD technology from moving forward, Samsung and Hynix are injecting massive amounts of cash into the sector to compete with their rivals.
Samsung, also the world's No. 1 flash chip manufacture, has already been applying its flash memory technology to developing multilevel-cell flash-based 128-gigabyte SSD, which it will produce this year in 1.8-inch and 2.5-inch versions for laptops and desktop PCs, as well as for other mobile applications.
Hynix is also to follow the trend by introducing 128-gigabyte SSD from the second half of this year.
``We are negotiating with controller makers and plan to introduce SSDs based on single-level chip technology,'' Kim Jong-ho, the chief of Hynix' Flash Memory Development Division said, adding his company has been in talks with some controller makers.
Experts say external uncertainties ― the weak U.S. dollar, falling prices of flash memory chips and aggressive investment by Japanese chipmakers ― will hurt South Korea and advised them to pitch up efforts to jointly develop the next-generation technology.
Active Tie-ups in LCD, AM OLED
Riding on the market boom ahead of the Beijing Olympics, the faster U.S. policy shift to digital television and UEFA Euro 2008 tournament, South Korean flat-screen makers and panel suppliers have been maximizing their production to catch up with the trend.
Samsung Electronics, the world's top crystal display TV maker, has been active in securing stable procurement channels to meet this year's sales target of 18 million sets.
``Last fall, Toshiba asked us to supply 30 percent more panels but we refused the offer as our digital media division had asked for more panels,'' said a Samsung official.
The company, which has been faced with strong challenges from Sony and Toshiba, plans to concentrate on 46- and 52-inch LCD TVs this year, rather than pouring capital into next-generation TV sets with 60-inches.
Samsung's strategic partner Sony has recently struck a deal with Sharp to jointly develop crystal display TVs over 60 inches using a 10th generation production line.
Early this month, Samsung's cross-town rival LG Electronics decided to buy 2 million 32-inch panels from Sharp, the world's No. 3 LCD TV maker, to achieve its yearly target of 14 million units.
Even LG will follow with purchases of 52-inch panels from the Japanese company for a better position in the global flat-screen TV market.
``There is concern that the global flat-screen market will face oversupply from 2009, However, we are quite positive about winning a battle of `economies of scale' in full high-definition (HD) TVs,'' an LG official said.
According to the data from DisplaySearch, a market research firm, the global LCD TV market will reach some 100 million units by the end of this year from 79 million in 2007.
In the plasma display TV sector, both Samsung and LG plan to invest more to strengthen 32-inch HD-PDP TVs in response to rising demand in emerging markets and North America.
``In order to better compete with Japanese rivals, we should not lose low-end markets as well,'' another LG official said.
The TV boom also fuels an additional growth momentum to local panel suppliers such as LG Display and Samsung SDI, both of which are eyeing bigger presence in the global market than their Taiwanese and Japanese rivals.
LG Display, formerly LG.Philips LCD, plans to churn out over 50-inch panels with the eight-generation line this year and the company has engaged in talks with Samsung Electronics to supply its distinctive 37-inch panels.
The world's No. 2 crystal display supplier capitalizing on the industry's mainstream 40-inch level has reportedly been told to tie up with Taiwan's Hannstar Display to build a plant producing 40 and 50 inch LCD panels.
``We will accelerate efforts to strengthen strategic partnerships in a bid to see the company get 5 more percentage points in profits than our competitors,'' its Chief Executive Kwon Young-soo told reporters.
Samsung SDI, the first mass producer of active-matrix organic light-emitting displays (AM OLEDs), hopes to stamp its leadership as the maker of the next-generation displays on an increasing consumer appetite for brighter images and power consumption.
``Samsung is likely to solidify a partnership with LG Display for the next-generation displays as a long-term strategy, as flat-screen makers are betting AM OLED screens will replace the currently dominant LCD panels on mobile phones and portable handheld devices,'' an official from Samsung SDI said.
In the mobile phone sector, where Samsung Electronics and LG Electronics rank the as the world's No. 2 and No. 5, respectively, their design-focused touch screen mobiles will be conspicuous.
Samsung is expected to commercialize a touch-based card phone code-named ``SGH-F480'' in the first half of this year. The company is set to launch its strategic ``Soul'' multimedia touch screen phone in Europe in April.
``Touch screen phones have become a major trend in the global phone industry as consumers want to grab user-interface (UI)-focused convergence gadgets,'' said a Samsung official.
According to Gartner, a market researcher, the market for touch screen phones will increase to 35 million this year from 15 million in 2007, while Strategy Analytics forecast that touch screen phones will account for 40 percent of the market by 2012.
LG Electronics, which has already introduced a series of such phones ― Voyager, Prada and Viewty ― hopes to surge ahead of No. 4 Sony-Ericsson with the strategic ``KF-700'' model by riding on the wave of ``emotional'' touch-based mobiles.
``Global makers are busy producing touch-based phones focused on the sophistication of UI as UI is not considered as a service platform any longer,'' said an LG official.
yckim@koreatimes.co.kr
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