Brazilian President Luiz Inacio Lula da Silva, third from left, is briefed on the manufacturing process of mobile phones at Samsung Electronics’ handset manufacturing plant in Campinas, Brazil, in March last year. Samsung, the world’s biggest consumer electronics maker, plans to invest $100 million in Brazil over the next three years to meet the rising demand for consumer electronics in the region. / Korea Times File |
Rising Demand for TVs, PCs Explain Samsung's Brazilian Commitment
By Kim Yoo-chul
Staff Reporter
Samsung Electronics, the world's biggest maker of flat-screen televisions, plans to invest $100 million in Brazil over the next three years to meet the rising demand for consumer electronics in the region.
Samsung executives said there was little chance of building a new TV manufacturing line in Brazil at present. But they said the company needs to increase its production capacity for consumer devices, especially LCD TVs, ahead of the upcoming World Cup and Summer Olympics in 2014 and 2016, respectively.
"We don't currently have any plans to build a new TV line. But we will invest more there to actively respond with increasing demand for consumer gadgets," a Samsung spokesman said last week.
"Samsung is set to invest at least $100 million through 2012 and the investment may be more," a high-ranking industry official said. He said most of the investment will be allocated to push sales of LCD TVs, PCs and mobile phones.
The plan is in line with Samsung’s realignment strategy in Brazil. The company is restructuring production lines there to cope with a booming demand for video products.
Samsung aims to increase LCD TV sales this year by 300 percent.
Revenue for LCD TV sets surpassed those for outdated bulky cathode tube-ray (CRT) televisions for the first time during the first seven months at $1.11 billion versus $1.04 billion, Samsung and industry sources said.
The plan came a month after Samsung entered Brazil's PC market. The manufacturer plans to offer more budget PCs or net-books and laptop models. It is also moving to sell PCs through alliances with local telecommunication providers.
Samsung runs a production affiliate and two sales units there, and last year posted sales of $2.7 billion, six times more than in 2003, according to data from the company.
Data from GfK, a market research firm, also showed that Samsung was the runner-up to LG Electronics in Brazil's LCD TV market with a market share of 23 percent as of the end of this year's third quarter.
"With the stabilizing regional economy and the world's two-biggest sports events coming up we are steadily seeing a rise in demand for consumer electronics capitalizing on flat-screen TVs," an official of the state-run Korea Trade-Investment Promotion Agency (KOTRA) said.
KOTRA said the demand for LCD TVs during the first 10 months of this year in Brazil rose by 35 percent from a year ago, while sales by Samsung Electronics went up between 35 and 40 percent during the same period.
Brazil has emerged as one of the hottest spots along with China for major consumer electronics companies.
Samsung's cross-town rival LG Electronics is also seriously increasing the output of mobile phones, plasma and LCD TVs and other audio devices to increase its market share, while Japan's Sony plans to outsource more of its LCD TV models to Brazil to narrow the market gap with the South Koreans.
Samsung Downplays Recession Worries
 Meanwhile, a senior company executive said Samsung is predicting a mild recovery for the global economy next year, downplaying concerns that another recession could pummel the technology industry.
The optimistic outlook has the company maintaining bullish projections for its two major businesses ― memory chips and flat screens.
Samsung Electronics recently decided to raise its capital expenditure on its memory chips and liquid crystal display (LCD) panels to 8.5 trillion won (about $7.3 billion) next year _ 5.5 trillion and 3 trillion won, respectively, and a 40-percent increase from this year's 6 trillion won.
"We are ruling out the possibility that the global economy may fall into a deep recession in 2010. We see a mild recovery over the full-year," Lee Yoon-woo, Samsung Electronics vice chairman, told reporters on the sidelines of a Korea Chamber of Commerce & Industry (KCCI) forum at the Press Center in Seoul.
"However, it is unlikely that the global economy will show a strong upside track, as seen in 2009. Still, we are keeping a close watch on the job and housing situation of the United States," he said.
When asked about predictions that the global economy might see a slight recession during the first-half of next year, Lee said the company wasn't putting "too much weight" on this, saying that a possible dip wouldn't go beyond what could called the economy's "seasonality."
Recovering from a two-year downturn, the markets for chips and LCDs now seem to be back on track, driven by strong demand for consumer electronics products as people start to loosen their purse strings.
Lee was coy on another critical issue ― the government's pressure on companies to relocate some of its business units to the new Sejong City in Chungcheong Province.
Lee said the government has yet to officially request Samsung Electronics to relocate some of its manufacturing lines to Sejong or build a new plant there.
"Let's wait and see what will happen. We will review the situation if the government asks," Lee said.
yckim@koreatimes.co.kr
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