Samsung to build LCD plant in Slovakia

Samsung Electronics, the world’s largest maker of liquid crystal displays, yesterday said it would build an LCD panel assembly plant in Slovakia to expand its presence in Europe.

The South Korean company said it would invest Won147.4bn ($155m) initially in the plant in the western Slovak town of Trnava to begin construction in the first half. Operations at the plant will begin next year, said the company.

Samsung expects the plant to be a turning point in its efforts to increase its share of the fast-growing European LCD television market. Samsung already has a plant producing computer monitors and LCD TV tubes in Slovakia.

Samsung won approval for its investment plan from the Slovak government but it was unclear what kind of incentives it would receive. Samsung said the total investment amount for the new plant had not been decided but people close to the deal said the plant was estimated to be worth $600m.

Together with seven sub-contractors the factory is expected to create about 5,700 jobs by 2010.

Peter Ziga, Slovak Deputy Minister for Economy, told the Financial Times that it was important for the country to attract investment in areas away from the automotive sector, which, before the Samsung investment, accounted for more than 50 per cent of the country’s industrial production.

“It can be risky for the economy to rely on one sector so we want to attract other types of investors. The electro-technical sector offers higher value,” Mr Ziga said.

The investment will be one of the largest in Slovakia to date. Foreign investors have flocked to the country in recent years, attracted by its central location, labour costs, manufacturing tradition and low taxes.

Also, it comes at a time when the global LCD industry is suffering from oversupply and flat panel prices continue to fall as supply increases outpace demand growth.

Analysts said the assembly plant in Slovakia would help Samsung avoid heavy tax on finished products in the European Union, cut logistics costs and gain easier access to its European customers. Samsung’s cross-town rival, LG Philips LCD, is building a similar LCD assembly plant in Poland.

Samsung’s LCD business reported Won650bn in operating profit last year on sales of Won11,700bn.