S. Korean tech industry strengthened by crisis

By Kim Young-gyo
SEOUL, Sept. 7 (Yonhap) -- South Korean tech companies have emerged stronger from
the global financial crisis and a subsequent economic recession that have turned
out to be a big boon for them, rather than a bane, analysts say.

Viewing the crisis triggered a year ago by the collapse of Lehman Brothers as an
opportunity, Samsung Electronics Co. and other local tech manufacturers have
ramped up efforts to export more products and augment their global market share.
Another contributing factor has been the sharp descent of the South Korean
currency against the U.S. dollar, which made their exports cheaper in overseas
market, the analysts say. In the heat of the crisis in March, the Korean won
plummeted to an 11-year low against the greenback.
"Based on strong research and development, Samsung Electronics and LG Electronics
aggressively introduced more than a hundred handset models into the market,
catching up quickly with the diverse needs of global customers," said Kim Do-han,
a researcher at Samsung Securities.
Samsung Electronics and LG Electronics Inc. saw their combined share of the
global mobile handset market surpass 30 percent for the first time in the second
quarter of the year, according to U.S.-based market researcher IDC.
In contrast, market shares for the other three players in the world's top five
handset makers dropped in the second quarter from the same period last year, with
Finland's Nokia Corp., the world's largest handset maker, seeing its market share
fall from 40.4 percent to 38.3 percent.
A weak Korean currency also helped Samsung and LG expand their lead in the
display market over the Taiwanese and Japanese display makers.
While other Asian currencies were stronger or nearly flat against the dollar over
the 12-month period, the Korean won plummeted as much as 26 percent against the
greenback.
Timed with the slide of the Korean currency, China launched a campaign in late
2008 to encourage the purchase of LCD TVs and other appliances in a bid to
stimulate domestic consumption, boosting demand for South Korean-made displays.
"The South Korean display makers were also more flexible in controlling output
than their Japanese or Taiwanese counterparts, as they could produce the LCD
panels as well as the finished products," said Kang Jung-won, a researcher at
Daeshin Securities.
Samsung Electronics, also the world's largest TV maker, has its own LCD panel
division and LG Electronics has its own display unit LG Display Co.
Helped by increasing demand for mobile devices and digital TVs, Samsung's
semiconductor business returned to profit and Hynix cut their losses this year.
Investment cutbacks by cash-strapped memory makers also stabilized the price of
chips.
According to a report by Samsung Securities Co., a South Korea brokerage house,
the world's two leading memory chipmakers -- Samsung Electronics and Hynix
Semiconductor -- saw their combined share of the global dynamic random access
memory (DRAM) market reach 61 percent during the April-June period of 2009. It
was a 13.1 percentage point rise from the same period last year.
Their rivals in Taiwan -- Nanya Technology Corp., ProMOS Technologies Inc. and
Powerchip Semiconductor Corp. -- were estimated to have held a combined 13.8
percent, a 8.6 percent drop from 22.2 percent in the second quarter of 2008.
"It was a tough time, but the South Korean companies grabbed their opportunity
and enlarged their market share," said Park Tae-sung, an official at the division
of semiconductor and display businesses at the Ministry of Knowledge Economy.
"When the economy fully comes back, they are expected to get ahead in competition
and command a larger presence," Park said.
With cash-deprived companies having drastically cut capital investments over the
past quarters, the outlook for 2010 is brighter for the South Korean electronics
makers, analysts said.
"A time lag is expected as the foreign competitors will try to catch up with the
South Korean manufacturers, in the technology investments and marketing
activities," said Suh Won-suk, an analyst at NH Investment & Securities. "They
might report earnings surprises in the coming quarters."
ygkim@yna.co.kr
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