South Korea handset vendors saw stable growth in 3Q08

According to media reports from South Korea, global handset shipments in the third quarter held level at 311 million units, while South Korea-based leading handset vendors Samsung Electronics and LG Electronics saw stable business growth.

Samsung shipped over 50 million units in the third quarter while LG's operating profit margin remained in the double-digits although shipments saw a slight decline. Another handset vendor Pantech also continued to report profit gains. In general, the third-quarter performance of South Korea's handset industry was satisfactory in light of the weak economy.

Samsung's total shipments in the third quarter were 52 million units, better than the company's earlier expectations and up 13% from the second quarter. Shipments were mainly driven by the company's pricing strategy in Europe and marketing during the 2008 Beijing Olympic Games. However, Samsung's operating profit margin declined from 12.8% to 9%. Samsung has an almost 18% share of the global handset market, and its accumulated shipments for the first three quarters of the year were 124 million units. The company is expected to reach shipments of 200 million units for the year, according to market watchers.

LG's third-quarter shipments declined 13% from 27.7 million to 24.5 million units, and operating profit margin was down from 14.4% to 12% because CDMA handset shipments in India failed to meet expectations. However, LG maintained a double-digit operating profit margin for three quarters straight, making 2008 a satisfactory year for the company, the market watchers noted.

Meanwhile, Pantech's profit gains for five straight quarters indicates the company has moved from chasing volumes to pursue reasonable profits. Pantech focuses on the Japan, Mexico and the US markets and saw a total of 1.63 million export shipments in the third quarter, up 55% on year, while it also increased its market share in South Korea to 20%.

However, handset demand in the first-tier market is expected to shrink due to the financial crisis meaning South Korea players will place their focus on emerging markets in the future to promote better shipment growth, the market watchers added.