Visually Speaking

Having completed his silver jubilee with the company, Choi can truly be
referred to as a ‘Samsung veteran’. He joined Samsung shortly after he
graduated from Seoul National University in 1977. He became the sales office
manager in 1985 and is now the global head of the company’s bechmark visual
display wing. He talks about the Indian market, its high points and the
shortcomings, and plans for the future

On global LCD trends…

Sitting in India, one does not feel the heat in the Liquid Crystal Display (LCD)
market. Globally, this is the hottest aspect of the visual display segment. Last
year, the LCD market was estimated to be around 14 million units. This year, the
sky is the limit. We think we can sell as much as we produce. The industry
expects 100% plus growth rates in the coming years. The LCD monitor market leads
the pack accounting for over 95% of the total demand. But a few years from now,
we hope to see an equal demand from non-IT products like TVs and handhelds.

On production being stunted despite the healthy opportunity...

Investments. Technology is not an issue today, but finance is certainly a
problem. To build a world-class factory, the investment required is close to a
billion-dollars. Since returns are expected only after a year and half, the
company would need to have strong financial support. And this does not come
easily today. Most of the monitor manufacturers have been experiencing huge
losses for some time now. Besides, we are making decent profits at current
prices, but others continue to grope with their losses. However, with the
expectation that prices will go up further, some of the international players
are now evaluating fresh investments. But that will take some time.

The scenario in the CRT monitor space…

Unlike in India where the15 inch Cathode Ray Tube (CRT) display has become
the standard, the 15 inch CRT is fading out in other countries and the 17 inch
is taking over as the defacto industry standard. However, the 15-inch LCDs will
gain popularity in the years to come. And this is the trend among retail
consumers and corporates as well. If one considers the economics associated with
LCD and CRT monitors over a period of five years, the total cost of ownership
for the LCD is much less compared to the CRT. This, after considering a host of
factors like efficiency, strain to the user, maintenance and other costs like
energy and air-conditioning. Japan is a good example of this and we expect the
other markets work along the same trend. While notebooks account for nearly 40%
of the total PC’s shipped, the rest of the systems are bundled with flat
displays.

Even though IDC estimates indicate that LCD sales will increase, CRT sales
will still be greater by 2005. However, we are definitely seeing a reversal of
the trend.

LCD in the non-IT segment…

If the third generation in mobile phones takes off, it would open up a huge
market. The demand for different handsets will increase manifold. However, the
demand will continue to be driven by the IT market. For example, one notebook
panel equals 30-40 mobile phones’ display panels. We see the convergent LCD TV
as the next big growth area for us. Given the fact that we manufactured 22.5
million monitors and 11.5 million TVs, a LCD TV at the right price could see the
opening of a huge market.

Expectations from the Indian market…

India is a growing market and we are committed to this part of the world.
Samsung’s investments are a reflection of the importance of the Indian market.
Given the low IT and monitors penetration, there is no dispute regarding the
potential. And we are ready for the same. We have already set up a plant in
Noida with an initial investment of $10 million. The plant has a capacity of 1
million units in the first year of operations catering to the domestic Indian
market. Subsequently, the capacity of the plant will be enhanced to 4 million
units by the year 2005, with additional investments of $ 25 million.

On India becoming the monitor hub for Samsung…

The straight answer is no. Compared to our other South East Asian
manufacturing locations, India does not offer adequate infrastructure to drive
exports. We see high logistic cost, poor turnaround time, higher customer
clearance time and other associated cost as a key deterrent for making India an
export haven. In any other South East Asian country, it would take about 30-35
days for the complete production cycle, from sourcing to manufacturing to
shipping out to be completed. In India, it would take about 80-90 days. That
certainly does not give a cost advantage to the manufacturer. So, exporting out
of India in the near future can be ruled out. But we certainly expect Indian
manufacturing operations to take care of the demand emanating out of neighboring
countries like Nepal and Bangladesh.

Yograj Varma in New Delhi