Samsung’s System LSI Business Introduces Strategic Business Opportunities with Local Design Houses

- Samsung has chosen to partner with 15 companies specializing in semiconductor design. - A new business model is presented for cooperation between a large company and a small or medium-sized venture firm. System large-scale integration (LSI) devices represent core components for the digital era in the 21st century. To grow this important business segment, Samsung Electronics is partnering with small and medium enterprises (SMEs) to jointly develop and market new products. Samsung will also provide financial assistance. Samsung Electronics President Im Hyung-gyu, in charge of System LSI Operations, held a press conference at the Giheung Semiconductor Complex on July 27. During the press conference, he announced, "(Samsung) has begun full-fledged cooperation with domestic venture SMEs (small and medium enterprises) in order to bolster the competitiveness of Korea's System LSI semiconductors." President Im went on to say, "Samsung received proposals during a symposium held to stimulate cooperation with venture companies in April. We assessed these proposals fairly and came up with a list of fifteen companies with whom we will partner. Samsung will cooperate closely with these new partners to make them Korea's best in their respective fields in the next couple of years. In the process, we anticipate the competitiveness of Korea's System LSI business to be greatly enhanced." Five of the fifteen companies selected by Samsung will be considered "strategic partners", while the remaining ten will be "business partners". Different forms of cooperation will be carried out according to the feature and technical expertise of these two respective groupings. Samsung will offer its new "strategic partners" with Intellectual Property and know-how related to System LSI products. Products will be developed on commission and Samsung will support the marketing of these products continuously. Other incentives granted to these partners include investment funds, managerial support and use of Samsung's fabrication facilities. Cooperation with the "business partners" will follow international business practices. Product development will either be done jointly or on commission, while marketing will be performed together. Samsung is the first major Korean corporation to work together with domestic venture SMEs (small and medium enterprises) in the system LSI field. A comprehensive system of cooperation will be built, with the SMEs (small and medium enterprises) providing design technology and the major corporation offering its marketing capabilities, capital, process technology and production facilities. As such, this is seen as a new business model for others to emulate. The system LSI devices that result from this cooperative effort will be used in such areas as media SOC, Digital TV, Display Drivers, wireless LANs, multimedia card controllers, and consumer LSI. Samsung Electronics will apply these devices to next-generation digital products that integrate multimedia, networks, and mobile communications. In the first quarter of 2002, the first results of this alliance will be ready for the marketplace. The fifteen companies selected to partner with Samsung Electronics represent around 21% of the more than 70 venture SMEs (small and medium enterprises) involved in semiconductor design. Their competitiveness will be boosted by working with Samsung, which in turn, will boost the competitiveness of the Korean system LSI industry in general. Next year, Samsung Electronic plans to expand its program of cooperation to SMEs (small and medium enterprises) that specialize in the field of electronic set products.