By Kim Yoo-chul
Staff Reporter
South Korean companies are concerned over mounting external and internal business uncertainties, which have caused them to tighten their belts on their operations.
Industry experts say rising prices of raw materials including oil, volatile exchange rates and saturated local markets have cast a dark shadow over local business prospects.
``Business circumstances are unexpectedly unfavorable. Electronics giants such as Samsung and LG are intensifying efforts to increase efficiency by cutting costs and driving restructuring measures, while shipbuilders are eager to secure additional `money sources’ in a challenging situation,’’ said Park Sang-hyun, an analyst from CJ Investment & Securities.
Samsung Electronics, which has been grappling with the latest corruption scandal involving its group headquarters, is aggressively seeking ways to save labor costs, expand outsourcing channels and strengthen competitiveness through further acquisitions.
``I cannot say details about our possible M& A talks. However, we are set to act at any time, if necessary,’’ a ranking executive from Samsung Electronics said Monday.
Earlier this month, Samsung denied speculation that it may bid for Micron Technology’s non-memory business to strengthen its non-memory sector. In October, the world’s largest manufacturer of memory chips bought Israel’s non-memory chip developer TransChip to help strengthen its research and development capabilities in the image chip business.
Hynix Semiconductor, which has been directly hit by a price drop of dynamic random access memory (DRAM) chips, is also stepping up its efforts to maximize efficiency and strengthen ties with its contracted clients.
``What we need now is not big and bold measures. We need to save just pennies through aggressive cost-cutting measures,’’ Hynix spokesperson Park Hyun said.
Such moves are not confined to the semiconductor industry that accounts for 11.2 percent of the nation’s total exports.
Flat-panel makers are taking measures to slim down and get stronger by closing unprofitable lines.
Samsung SDI, a leading manufacturer of flat panels, has recently shut down its two local lines producing bulky and conventional cathode-tube ray TVs and plans to cut the number of the lines by nine to 11 in 2008 from the current 20.
LG.Philips LCD (LPL), the world’s second largest maker of liquid crystal displays, will take over an organic light-emitting displays (OLED) division from LG Electronics to create synergy in the promising sector. The operation is highly likely to start on Jan. 1, 2008.
```Selection’ and `Concentration’ are two key words to determine our future. To help clear business uncertainties, we will drive restructuring and intensify cost-cutting plans,’’ said Park Sang-bae, an LPL spokesperson.
Shipbuilders, enjoying brisk sales thanks to soaring oil prices, are flexing their muscles to win more high value-added orders.
``We will mass-produce solar cell products during the first quarter of next year to secure our next growth engine,’’ a spokesperson from Hyundai Heavy Industries said.