The rich become richer while the poor become poorer when it comes to Korean cell phone makers this year. The nation’s three major handset providers - Samsung Electronics, LG Electronics and Pantech Group - chalked up sputtering growth during the first half of 2004.



On the flip side of the industry, mid-tier makers struggled to find their feet as Sewon Telecom and Telson Electronics went bankrupt.



Market analysts predict only the big three, plus a handful of middle-of-the-pack local performers connected to mobile operators, will eventually survive the stiff competition at home and abroad. Samsung Electronic, the world’s third-largest cell phone vendor, sold 42.8 million units during the first six months of this year, up 69.8 percent from the same period in 2003.



During the second quarter, Samsung shipped a total of 22.7 million units, closing in on global runner-up Motorola, whose sales were limited to 24.1 million.



Based on its accelerated performance, Samsung ratcheted up its annual sales target by more than 20 million units to 86 million this month from its previous goal of 65 million.



Half-year shipments for LG surged by 71.6 percent to 18.7 million units and Pantech’s increased 85.7 percent to 8.8 million.



Although the electronics giants do not disclose their balance sheets specific to handsets, their profitability from the must-have gizmos is estimated to be very strong in light of their high average selling prices (ASP).



Samsung’s first-half ASP stood at about $185 and that of LG was $160, compared to global business leader Nokia’s $136, according to Seoul analysts. But while the powerhouses were busy uncorking the champagne, the nation’s medium-sized makers suffered irreversible setbacks as seen by Sewon Telecom and Telson Electronics.



Debt-laden Sewon filed for court receivership in May because of deteriorating cash flow as it recorded disappointing sales in its main market of China.



Earlier this week, Telson also applied for court mediation to suspend its debts, amounting to about $157 million as of the end of the first quarter.



Market observers attribute the mid-sized makers? relentless meltdown to ever-intensifying competition and worsening profitability of business in China, where most of them have invested heavily.



“The harsh global competition will trim the number of Korean cell phone makers to around five - the big three and a pair of wireless operators? affiliates like SK Teletech and KTF Technology? Greg Roh, a telecom analyst from Dongwon Securities, said.



SK Teletech is a handset-making affiliate of the nation’s leading mobile carrier SK Telecom, while KTF Technology operates under the wing of No.2 player KTF.


/ By The Korea Times