Skepticism Lingers Over Samsung-LG Display Alliance
By Ryu Jin
Staff Reporter
LG and Samsung, the two leading players in South Korea’s information technology (IT) industry and archrivals in the world’s display panel market, have joined hands for a strategic alliance to counter offensives from their Japanese and Taiwanese rivals.
But skepticism lingers over the success of the domestic alliance as to who will gain and who might lose. ``It may prove to be unsuccessful unless the interests are adjusted harmoniously among the players,’’ according to many analysts.
According to the Ministry of Commerce, Industry and Energy on Monday, the country’s four major display makers - Samsung Electronics, LG.Philips LCD, LG Electronics and Samsung SDI - set up the Korea Display Industry Association (KDIA) to stave off the rising challenge from foreign rivals.
Headed by Lee Sang-wan, chief of the LCD business division of Samsung Electronics, the association will seek joint research and development (R&D) on core display technologies, which will be selected in August through consultations with the government.
In an inaugural ceremony of the association at a hotel in Seoul, the members also agreed to jointly use patents that would be acquired through government-supported R&D activities, while refraining from a war of attrition among themselves.
Samsung Electronics and LG Electronics also agreed to break their long practice of not purchasing each other’s panels used in televisions, according to a ministry official. ``They plan to purchase television panels from each other if necessary from the second half of the year,’’ he said.
South Korea is the world’s powerhouse in displays. Samsung Electronics and LG.Philips LCD are the world’s two biggest makers of liquid crystal displays (LCDs), while LG Electronics and Samsung SDI are major producers of plasma display panels (PDPs).
According to a report, Samsung Electronics placed first in the LCD market last year, selling $14.8 billion worth of products, followed by LG.Philips LCD, which posted $11.2 billion in sales.
Most recently, however, the South Korean display makers have faced tough challenges from their foreign rivals. Companies in Japan and Taiwan, in particular, have formed a strategic alliance by combining the former’s technology and brand image and the latter’s production capability.
Minister of Commerce, Industry and Energy Kim Young-ju hailed the strategic alliance among chaebol. ``For a successful alliance, the leadership of large enterprises is inevitable,’’ he said in a speech at the inaugural ceremony.