By Kim Yoo-chul
Staff Reporter
Samsung Electronics and LG Electronics are now painting a bleak picture for their businesses next year.
``Samsung faces the biggest-ever challenge in the global electronics industry,'' Lee Yoon-woo, CEO of Samsung Electronics said in a ceremony compound in Suwon, Gyeonggi Province, last week, marking the company's 38th anniversary.
Samsung normally announces next year's business plan sometime in the first week of November. But its roadmap or 2009 hasn't been decided yet, according to Samsung insiders.
``Samsung needs to strengthen its global infrastructure and spur growth potential,'' Lee said.
The world's No. 1 memory chip and liquid flat-screen maker plans to maintain its current leadership by cutting costs and solidifying supply chain management networks.
``Nurturing new markets and grabbing more business chances are other issues,'' Lee said.
Such remarks come after Samsung suffered disappointing third quarter results. On Oct 24, the electronics giant said its net profit for the latest quarter was down 44 percent from a year earlier, as its two cash-cows ― memory chips and LCDs ― were massively hit by the industries' supply glut and weaker demand as the economic slowdown cut consumer appetite for electronic gadgets.
Samsung will scale down its investment in chips next year from seven trillion won this year because there is no immediate sign that the global memory chip market will turnaround. Meanwhile, Samsung has been cutting its LCD panel production by as much as 5 percent since August to tackle rising inventories and declining demand for pricey TV sets.
``Like our CEO emphasized, defending internal reserves has emerged as the top concern over external uncertainties,'' a Samsung spokesman said, Sunday. It recently dropped its $5.8 billion ambitious takeover bid for SanDisk.
LG Electronics has also joined with Samsung Electronics to fix up its strategies for 2009.
LG Group Chairman Koo Bon-moo will hold a three-week ``consensus meeting'' with the heads of the group's key affiliates ― LG Electronics, LG Display, LG Chem and LG Innotek.
``Tension is palpable ahead of this year's meeting as we are uncertain about our overseas businesses next year,'' a high-ranking group official said, adding ``more discussions'' directly chaired by Koo will be held before finalizing 2009 investment plans.
LG reported its first drop in profit in six quarters after a weak won drove up the cost of its foreign-currency debt. Its third quarter net income plunged 93 percent to 24.9 billion.
In order to find a breakthrough to offset falling profits, LG has decided to move to the low-end mobile phone market despite weaker distribution and sales channels unlike Nokia and Samsung Electronics. Its display unit LG Display also reported a 44 percent drop in third quarter net profit as the sluggish economy hit demand for flat panel TVs.
``The recent decision to change handsets policy to low-tier phones is somewhat risky because there is no guarantee of success without selling channels and a stronger brand image. But there isn't an option for the time being,'' said an LG insider.