vnunet.com Asia news wrap: Friday 18 November

Asia news wrap: Friday 18 November

South Korea's former telecoms monopoly is struggling to adapt as customers dump traditional phones in favour of mobile devices, an executive has admitted today. 

"We are facing a radical downfall of [our] main revenue stream," said KT (formerly Korea Telecom) executive vice president, Yoon Jong-lok, according to the Yonhap News Agency. Eighty per cent of Korea's 48 million people have mobile phones.

The company, which services 94 per cent of Korea's fixed phone lines and 52 per cent of the country's 12 million broadband connections, has repeatedly cut its 2005 operating profit target during the past three months, most recently setting a figure of $1.54bn, down from over $2bn last year.

In August, incoming KT chief executive, Nam Joong-soo told the Korea Times: "One of our most urgent missions is to find new growth phases. We are required to dig out new businesses that we can develop with our resources and technologies."

The company is promoting its WiBro (wireless broadband) service heavily at the ongoing APEC summit in Pusan, South Korea. WiBro, which will eventually be made compatible with the better known WiMax standard, provides a high-speed multi-megabit per second wireless data connection for mobile devices, including PDAs, notebook PCs and PDA phones.

The government demanded a $1bn investment commitment from KT in return for a seven-year licence to operate the service.

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A leading Chinese television manufacturer has warned that China's TV makers need to co-operate on technology development if they are to survive in the flat screen TV market, according to a report in the China Daily.

"LCD panel manufacturing is largely monopolised by foreign companies. For the future, we need to build our own strength in this technological area," said Wang Dianfu, chairman of Skyworth, China's third largest TV manufacturer by sales volume.

The LCD panel accounts for 80 per cent of the cost of an LCD TV, so manufacturers that do not control panel supply have to eke out a meager profit margin from the remaining 20 per cent of production costs.

Wang said that Chinese TV makers should jointly invest in a new shared LCD plant, at a cost of $1.25bn to $2.5bn.

About 70 per cent of flat screen TV panels used by Chinese manufacturers come from foreign suppliers, mostly in Taiwan and Korea. This figure includes TVs for domestic consumption and export. About 10 per cent of TVs sold globally this year will be LCD models, according to iSuppli.

However, rather than co-operating with local competitors, at least one leading Chinese TV maker, Xoceco, is securing its LCD supply by accepting a large investment from a Taiwanese LCD panel maker. Chunghwa Picture Tubes has told the Taiwan Stock Exchange of its intention to take a stake of at least 30 per cent in Xoceco.

In a related announcement, another major Taiwanese LCD panel supplier told Digitimes that it expected LCD TV market share to rocket to almost 50 per cent in 2009, with a total global production of about 108 million.