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LG to boost its research spending on electronics

LG Group, South Korea's second-largest business group, will raise its spending by a fifth next year to sell more digital televisions and mobile phones with color screens and close the gap with rival Samsung Group.

LG Group, which includes LG Electronics Inc, the nation's second-largest electronics maker, will spend 1.8 trillion won (US$1.5 billion) on research and development in 2003, it said in a release. Most of the money will be spent by LG Electronics, group spokeswoman Sue Kim said.

"LG needs to focus on digital televisions and mobile phones as these are the businesses with the best prospects," said Chung Sung Ho, an analyst at Dongwon Securities Co, who rates LG Electronics "buy."

"The spending is an appropriate amount. Any more would be bad for its finances."

The company faces competition from Samsung Electronics Co, South Korea's biggest electronics company, in most businesses. LG lost market share to its rival in the local cellphone market as Samsung introduced models with new functions. In response, LG has concentrated on growing its overseas mobile-phone business.

LG Electronics is the world's second-largest maker of flat- panel televisions and the world's sixth-largest maker of mobile phones.

About 1 trillion won of the total investment will go toward developing digital televisions, plasma displays, liquid-crystal displays and high-speed Internet-capable mobile phones.

About 350 billion won will be spent on digital home appliances and optical storage, with the remainder allocated to ``standardization of technology,'' the statement said.

LG's research and development workforce in Beijing will be increased to 180 people from 50 by next year, the company said.

In July, LG Electronics said it expects second-half sales to increase by as much as 11 percent from a year ago to 8.8 trillion won as demand for digital televisions and mobile phones rises.
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