Samsung sees risks, rewards in iPhone launch

/ Source: The Associated Press

Samsung, a leading producer of cell phones, is looking for a silver lining in Apple's move to storm the market with its new iPhone.

While the Apple handset poses a new competitive threat, it could spur demand in general among consumers for pricier phones that double as music players, e-mail devices and mobile TVs, according to Samsung executives. That might help sales for South Korea's largest corporation and other top manufacturers of mobile phones soon to be competing with Apple.

"Since it's new it could bring both sides, positive and negative," said Kim Jeong-han, senior vice president for Samsung Electronics Co.'s telecommunications business, told a conference call after the company released its fourth-quarter earnings results.

Apple Inc. CEO Steve Jobs unveiled the iPhone on Tuesday, signaling the Cupertino, Calif.-based company's long-anticipated entry into the mobile phone business. The ultra-thin device is controlled by touch, plays music, surfs the Internet, and runs the Macintosh computer operating system among other functions. The company plans to begin shipping it in June through Cingular Wireless, the biggest U.S. cellular provider.

Kim said that the iPhone, priced at $500 or $600 depending on storage capacity, will be able to penetrate the high end of the mobile phone market. Samsung, the world's third-largest manufacturer of mobile handsets, is a key player there with multifunction models like the BlackJack, a $450 device available through Cingular for as low as $200 with a two-year contract.

"But still we have an opportunity," Kim added as Apple's promotion of the device "means demand will be created" which could also benefit Samsung.

"So we will continue to introduce a variety of specialized function phones in the multimedia area," he said.

Samsung also may see other benefits from the iPhone's arrival.

As the world's largest maker of memory chips Suwon-based Samsung already provides NAND flash memory chips to Apple for its hot selling iPod digital music players and could potentially supply the chips for the iPhone as well.

An expanded music phone market spurred by the introduction of the iPhone "will create lots of demand for NAND flash," said Lee Min-hee, an analyst at Dongbu Securities in Seoul.

Chu Woo-sik, senior vice president and head of Samsung's investor-relations team, was optimistic about the iPhone's potential impact, but refused to offer details about what it could mean for Samsung in terms of supplying components like NAND chips.

"It seems iPhone will be using the whole spectrum of memory chips," he told the conference call, adding that depending on its success, the device could "have generally a very positive impact on the overall market and for the industry as a whole."

Chu cautioned, however, that Samsung could not comment "regarding the component supply aspect of iPhone."