Monday, May 19, 2008

Samsung & LG: Once fierce competitors are becoming partners

Samsung Electronics Co. Ltd (SEO:005935)and LG are two of the top electric companies of South Korea and fierce competitors in global market. Now, the once fierce competitors are becoming partners. In order to survive the competition, last week the two companies agreed on a cross-purchasing deal for their flat screen television products. Under the agreement, LG Display will buy Samsung’s 52’’ LCD panels and Samsung will buy LG’s 37’’ LCD panels. Till now, the two companies used to buy LCD panels from Taiwanese makers. With the rise of the Taiwanese LCD makers controlling 42% of the global LCD market the two South Korean giants have joined hands. The Korea Times reports:

The deal will also contribute to cutting the nation's trade deficit, while promoting investment in the local LCD panel industry. In addition, Samsung and LG have agreed to jointly develop mobile television technology aimed at becoming the industry standard in the North American market. Executives of the two companies said they plan to present their proposal to the Advanced Television Systems Committee (ATSC), an international group developing technology standards for digital televisions used in the United States and Canada.

The Samsung-LG collaboration comes before the ATSC's U.S. office is scheduled to pick a mobile television standard in the first half of next year. The joint action is expected to set the stage for domestic companies to move from rivalry to partnership in order to cooperate in developing technology, making products and exploring overseas markets.

In a display conference at the Seoul Hotel chaired by the Ministry of Knowledge Economy, Lee Sang-wan, chief of Samsung Electronics LCD division told that in the next two months Samsung would start the second phase of its eighth-generation lines that would be able to produce 60,000 sheets per month. Till now, Samsung has been refusing calls from LG to provide large-size panels because of the tight supply in the industry. The two companies could not reach an agreement over pricing and other technical matters.

Korean companies are market leaders in semiconductor, shipbuilding and other industrial sectors. Till now, the companies were competing with each other but with the rise of Japanese and Chinese manufacturers, the companies are now teaming up with each other to survive the growing competition.

Related articles:
The Korea Times

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