February 12, 1997 in Social Responsibility News

SEC Sets '97 Telecom Sales at W3.7 Trillion

Seoul, Korea, February 12, 1997: Samsung Electronics Co. (SEC) has announced its plans for the 1997 telecommunications business. These plans include a total sales target of W3.8 trillion, which breaks down into W2.8 trillion from the domestic market and W1 trillion from the exports.

Officials from SEC's Telecommunications Division ( led by President & CEO Hee-choon Park) held a press conference on February 12 at the Chosun Hotel in Seoul. They predicted that due to the deregulation of the domestic telecommunications market, preparations in facing such an age of `unrestricted competition` will be made. Thus, officials of Samsung stressed that 1997 would be a very important year for laying out the groundwork to make SEC one of the world's top five manufacturers of multimedia telecommunications products. In this connection, they plan to strengthen the company's international competitiveness by establishing strategic alliances with leading overseas companies.

To prepare for the survival in the "era of unrestricted competition," Samsung Electronics announced the following five principal strategies for this year.
(1) An aggressive approach in the development of its core strategic businesses.
(2) restructuring its existing operations based on the interest of maximizing its profits.
(3) strategically expanding in its overseas business.
(4) strengthening its R&D capabilities which as a result, will automatically come in serving its fifth strategy,
(5) secure international competitiveness through financially sound business.

Investments made in the Telecommunications Division (for the year alone) is to be W240 billion for the new facilities, and W410 billion in R&D. This years budget of W650 billion, 27 higher than in 1996, reflects the seriousness of Samsung Electronics management strategy, which is to become one of the world's top five makers of telecommunications hardware. To achieve this ambitious goal, SEC, first of all, is determined to strengthen and sustain the already positive marketing position of its CDMA (cellular, PCS) terminals and systems, fiber optics and multifunctional office machines. Second, determined to focus on the development in the areas of mobile telecommunications systems (FPLMTS), asynchronous transfer mode (ATM) switching systems, global mobile personal communications services (GMPCS) and wireless local loops (WLL).

Samsung Electronics predicts that mobile communications and networking will be the areas of high-growth for the 21st century, and thus has decided to pursue them aggressively.

The company has secured a leading position in its new domestic market for the code division multiple access (CDMA) terminals and systems. Now, Samsung is taking a step further-up in its marketing activities, aimed at overseas service providers with an objective to truly globalize its telecommunications business. SEC also plans to develop new "strategic" products on a faster pace, localize the production of key parts and components, and secure essential technology in order to enhance product competitiveness.

Another core area of the business is networking, and SEC will focus on developing strategic product areas such as LAN servers and ATM switching systems. Such developments in this area will be used for the next-generation networking markets of the overseas area.

Existing business areas will be restructured based on the interest of maximizing profitability ; businesses lacking in competitiveness will be turned over to small and medium-sized manufacturers either domestic or abroad. In otherwords, Business with limited profit-making potential will be phased out. Products in the high-growth area, such as printers and key phones will be fully supported in its development. Also, SEC's competitiveness in switching systems and data transmission networks will be improved, and expanded as well.

To broaden the overseas business activities, new retail and production facilities will be secured, and much involvement will be made in providing mobile telecommunications services. Last year, overseas sales amounted to just 20 of total sales, but the overseas figure is expected to be increased to 26 in 1997 and to reach 55 by the year 2000.The overseas R&D network in the US, UK, Russia, India and Japan will be reinforced. Ultimately, allowing them to conduct their merchandising, development of new products, sales and after-sales service according to the needs of its local environment.

Meanwhile, in Korea, completion of an optical cable plant at Kumi is being accelerated. The cell production method is to be applied in order to aggressively develop SEC`s fiber optics business.

SEC Telecommunications Division President Park stressed at the news conference that the company needs a new corporate culture; if it is to grow into one of the world`s top five makers of multimedia telecommunications hardware. He said that the Division would implement three programs in this regard; a more open organization, more involvement through dialog and discussion, a future-oriented management system that can manage change. Thus, as a result, a synergy effect which will maximize cooperation among organizational units will be established.


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