SEM's Long-term Vision
Samsung Electro-Mechanics aims to be among world's top three electronic parts makers
The Samsung Electro-Mechanics Co. recorded 810.1 billion won in sales in the 4th quarter of last year with operating profit of 2.5 billion won in consolidated accounting basis. The quarterly sales is up 10.3 percent from the preceding quarter, but operating profit is down half from the preceding quarter, which recorded 5 billion won in operating profit.
The Samsung Group affiliate attributed the excellent performance record to improved sales of its core analogue products across the board, especially, chips, parts and RF and management reform, showing good results, boosting the company quarterly sales to over 800 billion won for the first time in five quarters since the third quarter of 2004.
The company said its operating profit in the 4th quarter would have recorded 41.5 billion won if one-time charges and the depreciation expenses for its overseas subsidiaries were withheld, far better than the 3rd quarter, building an improved profit structure.
The company's total sales amounted to 2.93 trillion won and operating loss of 42.6 billion won due to the appreciation of Korean currency and the restructuring of a number of its products.
The Samsung affiliate said it will continue to push to improve the cost for its slim-type expense structure developed last year and expand technology and management reform this year, too, to secure a competitive edge to reduce the impact from the appreciation of the Korean currency against the U.S. dollar and high oil prices. The company will continue to build a high-profit structure, strengthen its global business capacity, deepen the technology driven company system and expand its core business area this year.
In order to secure a stable profit structure this year, the company will separate the equipment plate department into the SEMbrid and package sectors to raise their profit structures as part of its strategy to make all of its product sectors profitable, without deficit sectors and build a sound business structure.
The company is targeted to reach 3.1 trillion won in sales this year, up 6.9 percent from last year.
Samsung Electro-Mechanics is a step ahead of the ever-tightening global restrictions on the use of toxic substances in electronic parts and devices. Mass production of environmentally-friendly printed circuit boards (PCBs) has begun the SEM's Busan plant, which specializes in board design and production. The new PCBs have substituted phosphorus compounds for brominated flame retardants, which are part of the halogen group. The plant facilities have also been redesigned to withstand the higher temperatures required for applying lead-free solder.
SEM began pilot production of the new boards in the second half of last year and approval has been obtained for using them in certain mobile phone models. Therefore, large volume shipments have started. Europe's Waste Electrical and Electronics Equipment (WEEE) and Restriction on Hazardous Substance (RoHS) go into effect this coming July, which will drive demand for the environmentally-friendly PCBs for mobile phones.
The restrictions will be extended to other product categories by 2007 and SEM plans to stay ahead of the game by establishing a separate board production line for the new type of printed circuit boards at the Busan plant. SEM expects the environment-friendly PCBs to comprise some 15 percent of total mobile phone PCB sales in 2006.
SEM aims to be one of the world's top three electronic parts makers by 2010, with annual sales of 9 trillion won and profits amounting to 15 percent of sales. To reach this goal, the company is restructuring operations to center on eight mainstay product categories, utilizing three strategic technology areas ― materials, radio frequency and network and optics technology. The vision is to be achieved by repositioning SEM as a 'technology-driven company'strength-ening global competitiveness, business concentration, and increasing its scale and cultivating a new vision mindset. nw

President Kang Ho-moon of Samsung Electro-Mechanics Co.