LG close to signing deals with local firms

LG Electronics Inc, South Korea's second largest electronics maker, is close to signing agreements with Taiwanese manufacturers to supply liquid-crystal display (LCD) televisions and LCD computer monitors in a bid to cut costs while boosting its market share, a company executive said yesterday.

"Now we have five or six names on the shortlist. The final decision will be announced within a month," said Steve Park, chairman of LG Electronics' Taiwan branch yesterday.

Park's announcement came after the company said earlier this month that it planned to almost triple its purchases of electronics from Taiwan to US$1.4 billion this year, compared with US$500 million last year.

Park said that LG Electronics plans to clinch deals with several Taiwanese partners, as his company is looking for assemblers for mainstay 32-inch LCD TVs and 17-inch LCD monitors, or even bigger models.

"To boost market share using low-end products, outsourcing manufacturing to Taiwanese manufacturers is unavoidable," Park said.

Taiwanese companies now supply nearly 70 percent of the world's LCD computer monitors.

Through cooperation with local manufacturers, Park hopes his company will be able to grab the top position in Taiwan's LCD TV market over the next year or two, which means that LG will have to get a share of at least 15 percent.

If things go smoothly, the partnership could extend further to supply LG Electronics in markets outside Taiwan, Park said.

Park declined to reveal which companies are in talks with LG Electronics. He only said that the candidates include local TV makers and computer assemblers.

"LG Electronics tends to choose partners without direct competition with its products," said Ja-lin Yang (楊嘉林) of SinoPac Securities Corp (建華證券).

TPV Technology Ltd (冠捷科技), the world's biggest computer-monitor supplier, may top the shortlist, as the company is good at making both TVs and computer monitors and it can offer a good price, Yang said.

Lite-On Technology Corp (光寶科技) and Innolux Display Corp (群創光電) are also possible candidates to make LCD monitors for LG Electronics, Yang said.

As for TV suppliers, TV vendors Tatung Co (大同) and Teco Electric & Machinery Co (東元電機) should have a chance of winning orders.

More than half of LG Electronics' LCD TVs and computer monitors sold in Taiwan will be assembled here starting in the first half of this year, Park said.

LG Electronics aims to boost sales of LCD computer monitors in Taiwan to around 40,000 units this year, and that of LCD TVs to 30,000 units.