Big Match Up Between Samsung and LG in Home Appliance and Mobile Phone Market

Samsung Trying to Catch Up with LG in the Market for Home Appliances-

Samsung Electronics announced the launching of the world’s first digital media broadcasting (DMB) TV earlier this month. As soon as it was reported, LG Electronics argued back strongly, saying that LG already introduced commercialized products last June, and that Samsung is exaggerating.

Earlier this year as vice chairman of Samsung Electronics, Yun took the position that directly manages the home appliance business and the vice chairman had expressed his strong will to catch up with LG. Samsung earned 60 billion won in operating profit in the first quarter of this year (January-March), but the figure soon dropped to 10 billion won in the second quarter (May-June), and then to 9 billion in deficits in the third quarter (July-September).

On the other hand, LG has stayed near a seven to 10 percent operating profit and is also doing well in the market for digital TV, pressing Samsung hard.

Vice chairman Yun, whenever he attends overseas exhibitions, is known to never miss dropping by the LG booth. He is also known to always take LG Electronics into consideration when he comes up with business strategy.

LG Trying to Catch Up With Samsung in the Market for Mobile Phones—

The ratio of operating income to revenue that Samsung gained in the market for mobile phones dropped to 13.4 percent in the third quarter from 27.2 percent in the first quarter this year. The world’s largest mobile phone company, Nokia, is most attributable to such dive, as Nokia has pushed ahead with an aggressive dumping strategy. But the price cutting strategy of LG surely has played its role in weakening its competitor, explained Samsung Electronics.

The ratio of operating income to revenue of LG increased 3.2 percent in the first quarter to 7.2 percent in the third quarter, but is still half that of Samsung’s. Vice chairman of LG Electronics Kim is reported to strongly encourage executives, saying how come LG, with such excellent products, is still having a hard time to catching up with Samsung in terms of earning rate.

A Big Match Up in the Display Market—

LG Philips LCD strongly complained against Display Search, a market research organization, raising the issue out of the organization’s recent report saying that Samsung won back the first place in only a month by having sold 3,070,000 10-inch or larger LCDs in November, while LG Philips LCD had sold 3,020,000.

LG Philips LCD recently announced a win against Samsung, reporting that its November sales were 3,150,000, higher than that of Samsung (3,130,000). Then, the outside researcher produced a contrary report, undermining the report by the LG Philips. The two companies are again preparing for a competition for leadership in the market for large LCD TVs. Samsung plans to introduce 40 inch and 46 inch models, while LG Philips LCD plans the launching of 42 inch and 47 inch models. A big match up is expected.

Do-Young Kim Joong-Hyun Park nirvana1@donga.com sanjuck@donga.com