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Samsung SDI Struggles to Close CRT Lines

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By Kim Yoo-chul
Staff Reporter

Samsung SDI, a local manufacturer of flat panels, is facing a severe struggle in its bid to convert facilities making bulky cathode-ray tubes (CRTs) for TVs into those producing plasma display panels.

Last week, some 700 workers in Samsung SDI's plant in Busan, some 450 kilometers southeast of Seoul, scuffled with 10 guards, resulting in a loss of 100 million won and injuring 20 people.

The rally occurred as the world's third-largest maker of plasma display panels was seeking to close its two lines with an annual capacity of three million units for the bulky products there in order to focus on the much more profitable businesses such as plasma display panels and active-matrix organic-light emitting diode (AM OLED).

''Samsung should stop the restructuring until we are guaranteed permanent jobs,'' said Kim Seong-chul, one of the protesters.

Money-Losing Units

In recent years, sales of CRTs, which are used as monitors for TVs and some computers, have shrunk amid the rise of flat-panel displays such as liquid crystal displays.

To keep up with the global trend, Samsung SDI has been accelerating its moves to switch the money-losing conventional CRT lines into those of plasma display panels. The company suffered an operating loss of 118.2 billion won in the third quarter, a major reversal from a profit of 43.5 billion won a year ago, due mainly to weaker prices of flat-panels used in TVs.

''We will cut the number of lines producing CRTs by nine to 11 in 2008 from the current 20,'' a Samsung SDI spokesperson said on condition of anonymity.

''If the process goes smoothly, the annual capacity of CRT production will be cut to 34 million units from the 46 million at present,'' the official added.

The company has already decided to convert its facilities manufacturing CRTs in Hungary into producing plasma panel lines, to meet rising demand for the panels, as improving economic conditions in Eastern Europe produces better consumer purchasing power.

To appeal to North American consumers, the company has also been in the final stage of talks to change two production lines for CRTs in Mexico to those making wide-screen panels _ over 50-inch.

''The conversion in Mexico will start in the first quarter of next year and similar processes will also be conducted in our China plant,'' the official added.

Samsung SDI said it aims to lower the proportion of CRTs for traditional TVs to 14 percent of total sales by 2010 from 34 percent now, while raising its PDP portion to 32 percent from 24 percent.

''We cannot survive in the challenging market situations without efforts to cut labor costs and increase production profitability. With higher focus on AM OLED and PDP businesses, we will speed up the previous plan to decrease the portion of CRTs in our total sales,'' another senior official from the company said.

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