Samsung eyeing flat panels

Samsung Electronics Co, the world's No.3 handset vendor, said it was considering buying small-sized liquid-crystal displays (LCD) from Taiwanese makers as part of its plan to buy 30 percent more from Taiwan this year.

The company already buys keypads, memory chips and passive resisters from Taiwan, a company executive said yesterday.

"We hope to strengthen our partnership with Taiwanese component suppliers," said Roh Kihak, vice president of Samsung's sales and marketing division in the Greater China region, "though we are not considering farming out phone production to local firms at the moment.

"LCDs top our shortlist. We're pondering the possibility now," Roh said.

Sharp Corp of Japan is also one of the South Korean company's suppliers, he said.

Samsung estimates that it will buy 20 percent to 30 percent more from Taiwanese electronics manufacturers this year, particularly in the communications sector, Roh said. The company bought nearly US$600 million electronics goods from Taiwanese manufacturers last year.

Samsung has to buy more from outside South Korea to lower costs as handset prices fall, said Gary Lai (賴晴風), a telecom analyst with Insight Pacific Investment Research (月涵投顧) in Taipei. "I believe an increasing number of international cellular phone vendors will follow suit."

Analysts said Ichia Technologies Inc (毅嘉), Taiwan's biggest keypad maker, had a good chance of extending its partnership with Samsung. Ichia has between 12 percent and 15 percent of the global keypad market, said Chou Chi-shian (周奇賢), an analyst at SinoPac Securities Corp (建華證券).

"South Korean companies are good at manufacturing handsets, but Korean component manufacturers lag far behind Taiwanese companies in terms of coverage and quality," Chou said.

AU Optronics Corp (友達光電), Taiwan's No. 1 maker of flat panels, could be one of the hopefuls to win LCD orders as it has the capacity to meet Samsung's demand, according to Alex Wu (吳興國), an analyst at KGI Securities Co (中信證券).

AU has outpaced its local rivals by entering the handset-panel sector last quarter. It is expected to ship a large number of such panels this quarter, Wu said.

Rivals Toppoly Optoelectronics Corp (統寶光電) and Prime View International Co (元太科技), which focus on producing small LCD panels for cellular phones, could be alternatives, but they have limited capacity, Wu said.