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Why Is Samsung All In for New Phone?

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  • Published Jun 22, 2009 6:40 pm KST
  • Updated Jun 22, 2009 6:40 pm KST

Move Is Related to Planned Realignment in Chip Business Formula

By Kim Yoo-chul

Staff Reporter

Samsung Electronics' moves to boost its smartphone-related portfolios have been gaining steady momentum, with a series of the latest models rolling off conveyor belts.

The company's Jet and T-Omnia handsets, equipped with a Microsoft Windows operating system, are leading the move aimed at bolstering the unit.

And now Samsung is set to unveil another strategic smartphone within a matter of weeks.

Early last week, the firm showcased four new models for its "Omnia" smartphone series, two of which featured QWERTY keyboards at the CommunicAsia exhibition in Singapore.

Global sales of smartphones, which can perform functions similar to a personal computer such as e-mail and Internet access, rose 13 percent in the first quarter to 36.4 million, while overall handset sales dipped 8.6 percent to 269.1 million, according to market research firm Gartner.

But there is more to the company's smartphone pitch than meets the eye.

Samsung wants its relatively weak system memory chip business to benefit by putting its highly advanced application processors into strategic smartphone models.

The electronics maker is the world's largest supplier of DRAM and NAND flash memory chips, which are susceptible to volatile market situations.

Under the leadership of Kwon Oh-hyun, Samsung is placing an emphasis on system chips, the pieces of technology that control multiple functions in electronic gadgets and cars and look like a maze of circuits on a single sliver of silicon.

In 2008, Samsung reaped 11.59 trillion won in sales in the memory chip business, but only took 3.41 trillion won in the system chip business, according to data from Financial Supervisory Service (FSS).

"Samsung is still tapping the capability for system chips. We need to have some more confidence in guaranteeing the currently infant business," a Samsung official said.

Samsung claims to possess strong marketing power to propel its smartphones on the basis that it has achieved "economies of scale" in the mobile phone business.

"If Samsung's smartphones equipped with its own system-operating chips sell well without suffering from customer complaints, then the company will lean more toward the business," an industry source said.

Samsung plans to sell 200 million mobile phones this year. The smartphone portion is forecast to rise by 30 percent this year, officials say.

Samsung investor relations team head Robert Yi said earlier that the company hasn't changed its stance to seek external growth through merger & acquisitions (M&A) and added that the company was reviewing "many options" for further gains.

yckim@koreatimes.co.kr