'Samsung Electronics to Focus on Keeping Lead

Company weighs investment scale watching biz trends and to diversify products to suit emerging markets

Samsung Electronics Co. will be able to exit the dark and long tunnel of economic slump swiftly, asserted Vice President Choo Woo-shik of the electronics giant at the company's investor relations session held in San Francisco Dec. 8.
The vice chairman in charge of the company's investor relations said the sales of semiconductor chips and LCD have been down, but not as much as those by its competitors, adding that the company will be able to expand its lead over its rivals further during the global economic crisis.
Samsung Electronics will prepare for the time when the economic is back on track, while coping with various changes in the market.
The company said the sale of chips in the first half of next year will be further slowed due to the contraction of demand, despite the cuts in production. The market for LCD, the company's leading product with the largest share of the market, is projected to pick from the second quarter next year, following a slump in the first quarter.
Choo said the world market for cell phones has been slowing, losing growth momentum with the distribution rate reaching 45 percent level.
The company has been agonizing over the amount of its investment next year amid the downturn. Choo said the company might cut the amount down to 7 to 8 trillion won from 10 trillion won originally projected, although the discussion is yet to be finalized and the investment scale has yet to be firmly set. Other company officials said the investment figure will be firmly decided in the first quarter next year and announced during the Q4 investor relations, along with the performance results for 2008.
Industry sources Samsung Electronics like any other business firms would have to scrounge for cash to build up its cash reserves, although its investment for next year would be scaled down.
An analyst for Hana Securities said the electronics industry is mired in a survival struggle with the economic conditions rapidly deteriorating and Samsung, too, would have to be a little conservative in its investment plans and build up its cash reserves. Foreign investors in Samsung Electronics shares have been urging the company to scale down its investment for next year as the markets for chips, LCDs, and PC would likely to experience severe downturn.
But Samsung feels that if a giant firm like itself cut down its investment next year, it would look bad for the company in terms of its contribution to the growth of the national economy. The company management has been tinkering over a number of options watching closely the flow of business trends.
The company has decided on a number of measures as key words in its strategies for next year: Diversify its products; lead the development of high-tech; strong utilization of it brand name; strengthen the management of its supply network; management of production and marketing by regions.
Outstanding points of the strategy are that the company will reduce the level of inventory in the digital media sector as much as possible and introduce new models twice a year. In the LCD TV sector, the company will introduce from 19-inch to 70-inch LCD TV models to meet diversified demand in the market.
The company also plans to diversify its cell phones with prices ranging from expensive ones to inexpensive models to boost its market share to over 20 percent of the world market from the current 17.1 percent. Vice President Choo said the cell phone market conditions would not look good next year, but the company will try to boost the market share to over 20 percent.
The company will have its overseas plants to produce more low-priced handsets and procure increased parts from local parts makers, especially in India and China and other emerging market countries. In the areas of chips and LCD, the company will focus on the development of new technologies to widen its lead over its rivals in the area.
In the meantime, Samsung Electronics has opened a brand shop with 850 square meters in space in Dubai, considered the hub of the Middle East, the company said Dec. 16.
The company said the Dubai Mall where its brand shop is located has 548,000 square meters in space about the size of 78 football field, the largest in the world with some 30 million visitors per year. The hub opened for business in October. Samsung's brand shop is the largest among its brand shops overseas and also the largest among electronic brand shops in the mall. nw

A scene from the Samsung Electronics brand shop in Dubai Mall, the United Arab Emirates, considered the hub of the Middle East to show off the company's latest electronics gadgets.