By JUNG-AH LEE
A decade ago, Samsung Electronics Co. was jostling in the pack of young technology companies chasing the likes of Hewlett-Packard Co. and Sony Corp.
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Now it's the biggest technology company in the world.
The rapid ascent of Samsung, founded in 1969 as a contract maker of black-and-white televisions for Japanese companies, was driven by a game plan familiar in Japan: Copy what you can, and invest the profits in speeding up technology upgrades.
But Samsung faces a new challenge now: defending its position at the front of the pack, while trying to set technology standards in new markets.
Success Stories
Success has landed a number of recently ascended South Korean titans in a similar spot: companies like LG Electronics Co., steelmaker Posco and Hyundai Heavy Industries Inc. Each has made huge strides over the past decade and now strives daily both to shed its former underdog image and to build on its technology and market lead.
Visitors try out Samsung's 'Galaxy Tab' tablet.
LG has its sights set on television sets that serve up Web-based video as easily as cable or satellite programming. Hyundai Motor plans to roll out hybrid cars as part of an overall global push into the increasingly lucrative green auto market.
Samsung, for its part, recently has invested heavily in such high-end niche spots as displays for the flat-panel-TV and cellphone markets. Earlier bets in semiconductors, mobile phones and liquid crystal displays paid off handsomely as digital broadcasting technology replaced analog, and as smartphones and LCD TVs became must-have items. But the company knows it has to continue to innovate to stay ahead of the field.
Its latest bet is on screens that use a cutting-edge display technology. Screens with organic light emitting diodes, or OLED, have a thin layer of organic material that glow, creating the screen's backlighting. OLED screens require less power than LCD screens. They also have clearer picture quality and a faster response time than conventional LCDs.
World Domination
Samsung Mobile Display, a joint venture of Samsung Electronics and sister company Samsung SDI Co., currently dominates the market for OLED screens used in mobile phones, with more than a 95% share. Samsung's Galaxy S smartphone, and Taiwan-based HTC Corp.'s Droid Incredible and Evo 4G all have OLED screens.
The company has invested heavily in flat-panel TV displays.
But Samsung's goal is to make OLED for products with bigger screens, such as tablet PCs and televisions—the latter being a very lucrative market.
The major stumbling block: Large OLED displays are costly and technically difficult to make. Sony pulled out of the OLED TV business in its domestic market early this year due to sluggish demand for the pricey sets and high production costs.
Screen Shot
But that's where Samsung, with its deep pockets, is hoping its investment in OLED technology will pay off. If it can mass produce televisions using commercially viable OLED technology, those sets should yield higher profits than TVs with LCDs. The latter currently make up more than 50% of the global TV market, but LCD prices have fallen sharply, eating into margins.
Bigger Displays
Lee Woo-jong, vice president of marketing at Samsung Mobile Display, says Samsung is "the only company that has succeeded in mass production of active-matrix OLED displays," a technology using a thin-film transistor to switch individual pixels on and off, making higher resolution and larger displays possible.
"Considering the advantages," Mr. Lee says, "we expect OLED TVs will receive a strong response from the market."
In the race to make the technology commercially viable, Samsung will probably face the strongest challenge from fellow South Korean giant, LG.
A group of LG companies bought U.S.-based Eastman Kodak Co.'s OLED business in December. LG Display Co., a sister company of LG Electronics Inc. and the No. 2 maker of flat panels after Samsung Electronics, said in April that it would invest $223 million to expand its existing OLED line, which will mostly produce devices used for smartphones and hand-held devices, and may target production of OLED TVs in the second half of 2011.
Champ Shin, vice president of the strategy and marketing center of LG Display, says it may take seven or eight years for the total volume of OLEDs to match current shipments of LCDs.
However, he expects consumer interest to pick up from around 2013, when he predicts the price gap between OLED TVs and LCD TVs will narrow to around 30%.
Hefty Subsidy
To keep South Korea ahead in the display business, the national government is also playing a part.
In May, it announced a five-year, government and private-sector plan to invest roughly $18.5 billion in local equipment and parts makers of both next-generation LCD and large OLED displays.
Other competition may come from Japanese and Taiwanese companies. For example, Sony continues to work on more commercially viable OLED TVs. And Taiwan's AU Optronics Corp., the world's third-largest flat-panel maker, plans to mass produce OLEDs in 2011 for mobile devices while also aiming to develop displays for TVs and tablet computers.
But, for now, the race appears to be Samsung's to lose.
"In the LCD business, we quickly caught up and became the leader," says Samsung Mobile Display's Mr. Lee. "But active-matrix OLED is a completely different technology from LCD," he says. "And since no one has succeeded in this technology yet, it sure is tough to be a leader."
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