Aborted Business Swap to Send Shock through Electronics Industry

Article excerpt

Samsung Group's decision to put its ailing auto unit under court receivership instead of swapping it for Daewoo Electronics is sending shockwaves through the domestic electronics industry.

The three major electronics makers -- Samsung, LG and Daewoo -- hade taken measures to cope with possible market turbulence if the government-led business swap went through.

But the so-called ``big deal'' is entering unknown territory with Samsung going its own way with the liquidation of Samsung Motors, pushing electronics makers to re-think their strategies.

Samsung Electronics reportedly believes that the failure of the swap scheme was unavoidable, while keeping its composure, at least superficially.

The nation's biggest electronics manufacturer passively waited for the decision by Samsung Group, maintaining its official position as an uninterested third party.

Even from the outset, a host of officials at Samsung Group repeatedly expressed skepticism about the viability of the big deal, particularly on the issue of taking over the electronics unit of Daewoo.

But Samsung Electronics is unlikely to get away unscathed in the wake of the bungled big deal. Above all, the company cannot avoid implementing restructuring measures to cushion the shock of the failed swap.

Samsung Electronics has so far absorbed 400 Samsung Motors employees as part of the group-wide efforts to rescue the sinking ship of the automotive unit. The electronics unit, however, is now set to accept 600 more workers from the ailing Samsung Motors.

Such an influx of extra manpower is rendering meaningless the painful restructuring measures of last year. Samsung Electronics took the teeth-grinding measure of shedding its excess workforce on a massive scale last year, but now t has to start it all over again.

Another item high on the agenda for Samsung Electronics is the need to map out long-term strategies, which had been stalled due to the ongoing big deal.

Samsung has consistently preached the virtue of focusing on semiconductor and info-tech as next-generation strategic businesses, downplaying the importance of its home appliance unit. …