By Kim Tong-hyung
Staff Reporter
SK Group, one of the country's largest conglomerates and parent of top wireless operator SK Telecom, is set to reenter the mobile handset market, industry sources said Tuesday.
SK exited the handset business in 2005 when it sold SK Teletech, then a unit of SK Telecom, to electronics maker Pantech, to rid itself of regulatory pressure.
However, with the group strengthening its commitment to the retail business, which includes SK Telecom's plans for a retail subsidiary, manufacturing its own hardware is starting to make more sense.
According to multiple industry sources, SK Telesys, a subsidiary of SKC, SK's chemicals and an advanced materials unit, is about to make its foray into designing handsets and will provide its first model to SK Telecom as early as July.
The company is also planning to develop a ``smart phone'' which supports Internet, multimedia functions and other data services for corporate users by the end of the year.
Qualcomm, a U.S.-based mobile-phone technology firm, has agreed to provide its MSM6250 chipsets, batteries and other components to SK Telesys, sources said.
The company will hand manufacturing to a contract manufacturer and isn't likely to be involved in handset manufacturing in the near future.
SK Telesys is already involved in manufacturing repeaters and other telecommunications equipment and had been providing Voice over Internet Protocol (VoIP) phones to SK Broadband, SK Telecom's high-speed Internet unit.
SK officials declined to confirm whether the company plans to source handsets from SK Telesys.
``We haven't signed a contract with SK Telesys yet, and we can't speak for the business plans of SK Telesys,'' said a spokesman.
Although SK Telecom is downplaying the significance of SK Telesys' advance into the handset market, recent moves by the mobile-phone carrier had hinted that the company has been renewing its focus on developing handsets.
SK Telecom currently has a team dedicated to the ``G-Project,'' which is involved in designing handsets and mobile Internet software. The mobile phones conceived by the G-Project team are produced by other handset makers under original design manufacturer (ODM) contracts, with the first models released by Taiwanese maker HTC last year.
Combined with the plans to establish a retail arm under SK Telecom, SK's focus on the handset market seems serious.
It remains to be seen whether SK's sequel in the handset business will produce a better ending than its first try.
SK Telecom is the country's biggest mobile-phone operator, with a market share of over 50 percent, but the company's dominant presence wasn't enough to make SK Teletech to a major handset maker when heavy-handed government regulations were in the way.
Under an anti-trust agreement following SK Telecom's takeover of then-rival Shinsegi Telecom in 2002, the mobile-phone operator was not to sell more than 1.2 million SK Teletech handsets per year to its subscribers.
Although the market cap was to be lifted in 2005, the Ministry of Information and Communication, the predecessor of the Korea Communications Commission (KCC), had planned to extend the restrictions on SK Telecom's handset business, which prompted the wireless carrier to bail. SK Teletech controlled less than 10 percent of the Korean handset market when it was sold to Pantech in May 2005.
However, there have been voices within the group that it should refocus on the handset sector, which is now dominated by Samsung Electronics and LG Electronics.
Having a handset maker on its side would give SK Telecom leverage in its negotiations with handset makers, and also compete better with KT and the LG Group, both involved in handset manufacturing and mobile services.