Samsung, LG, SK Telecom to develop advanced semiconductors

(ATTN: ADDS chief officials' comments in 8-12 paras)
By Lee Joon-seung
SEOUL, July 27 (Yonhap) -- South Korea's Samsung Electronics Co., LG Electronics
and SK Telecom will work with other local companies to make semiconductors for
hightech digital appliances that can replace imports, the government said Monday.
The plan calls for the first ever tie-up between Samsung and LG to make so-called
global digital TV receiver chips, while SK aims to create a wireless connectivity
system-on-chip (SoC) for smart phones with chip designing company Xronet, the
Ministry of Knowledge Economy said.
The government plans to provide 6.8 billion won (US$5.4 million) for the project
in the next year, while the private sector has pledged to inject 6.5 billion won.

Under the pact, LG will work with Samsung's foundry to make chips for its
best-selling digital TVs.
"LG and smaller partner companies will design the chips, with Samsung
manufacturing and testing the finished products," said Park Tae-sung, head of the
ministry's semiconductor industries division.
He claimed that if the tie-up is successful the country could save 300 billion
won in imports and be able to ship out 300 billion worth of products overseas
three years after the product is made. Seoul will allocate 4.0 billion won to
support research and development.
The move could, in addition, boost fresh business investments by 200 billion won
and lead to the creation of scores of jobs.
Kwon Oh-hyun, president of Samsung Electronics' semiconductor business, said the
company will continue to increase investments in the creation of non-memory
semiconductor fabrication plants.
"South Korea has been a powerhouse in the memory semiconductor sector, but not in
the non-memory sector," said Kwon. "I hope this tie-up will enhance non-memory
chips as a key export item."
The head of LG Electronics's semiconductor business also stressed that investment
in non-memory chips is inevitable for South Korea to retain its top position in
the world's IT sector.
"If South Korea is to continuously grow and retain the world's top spot in such
markets as digital TVs, mobile handsets and displays, investments in the
non-memory sector are key," said Paik Woo-hyun, president of LG's chip business.
"Even though we're in competition, LG Electronics will use Samsung's finished
products if they are of good quality," Paik said, regarding the company's
cooperation with its rival.
For smart phone SoCs, the ministry in charge of the country's industrial policies
said it will provide 2.8 billion won in state funding to help local development.
If a domestic SoC can be made, it is expected to replace imports of WiFi and GPS
semiconductors that top 800 billion won annually.
ygkim@yna.co.kr
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