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Samsung to expand China business

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By Kim Yoo-chul

A Samsung Electronics executive said Wednesday the firm will expand its smartphone business in China to better compete with Apple in the world's largest smartphone market.

"Samsung understands that Apple intends to boost its mobile business in China, as well as in Japan, meaning that we should try harder in these countries," Samsung's mobile business chief Shin Jong-kyun said.

Samsung will hold a launch event for its latest Galaxy Note3 tablet in China. The Korean technology heavyweight is set to release the 5.7-inch device in 140 countries.

Shin's remarks were made at his regular weekly meeting with chief executives of Samsung's key affiliates in Seocho-dong, southern Seoul.

The co-CEO implied that upcoming Samsung Galaxy-branded smartphones will be more powerful and faster by confirming that they would have 64-bit processing capability.

Apple announced that its new iPhone 5S will be driven by an ARM-based A7 processor that can process data in 64 bits, or twice the number for previous chips. The processor will be able to handle code for more demanding applications, including high-end games.

"Not in the shortest time. But yes, our next smartphones will have 64-bit processing functionality," Shin said, adding he followed the media coverage of Apple's new iPhone.

One interesting fact about Tuesday's launch was that Apple announced the iPhone 5C, a plastic-cased and cheaper version of its flagship smartphone.

In five different colors, the 5C will be sold at $99 per phone for the 16GB model with a two-year contract. The suggested retail price for the 32GB phone was $199 on the same contract.

Samsung officials contacted by The Korea Times said the release of the new iPhones means that the competition will be getting fiercer with Apple for a higher share in the highly-lucrative Chinese smartphone market.

As of the end of the second quarter of this year, Samsung was the top smartphone seller in China with 19.4 percent of the market. Apple's share was a negligible 4.3 percent.

"Apple believes that it can boost its market share in China thanks to stronger brand awareness. However, with better pricing, a diversified product lineup and solid partnerships with local channels, Samsung plans to keep its current momentum in China. We have no reason to allow Apple to steal market share from us," said one low-ranking industry executive.

The latest Apple phones utilize long-term evolution (LTE) mobile technology. The Samsung official said Chinese authorities recently authorized Samsung to put time-division duplexing (TDD) LTE technology on the company's future devices.

LTE uses bandwidths from 1.4-megahertz to 20-megahertz and supports both frequency division duplexing (FDD) and TDD.

"In order to meet consumer demand and to better respond to changing market situations, Samsung Electronics plans to release mobile devices that both support TDD-LTE and FDD-LTE in China ahead of previous schedules," the executive added.

Patent disputes

Apple's active penetration into the Chinese market is expected to have some impact on 40 ongoing patent disputes on four continents.

Samsung is hoping to strike a comprehensive cross-licensing deal with Apple as Samsung officials think the huge gap in smartphone share as shares means increased leverage on negotiations.

Apple is offering its newest iPhones through China Unicom and China Telecom from this month. The Cupertino-based firms are also in talks with China Mobile, which has a customer base more than twice the size of the entire U.S. population.

Apple is more popular in North America and Europe but lags in emerging economies including China and India.

Analysts say aggressive pricing strategies to be implemented by Apple will help it increase some of its shares.

But it looks quite uncertain whether or not Apple will challenge Samsung in China as iPhones are still regarded as high-end, premium products.

"Chances are low that the announced new Apple phones will strike a jack-pot immediately without huge subsidy plans," said IBK Securities analyst Lee Seung-woo.

Kim Yoo-chul


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