With Japanese and European electronics manufacturers having a tough time in the global market, Korea's LG Electronics is enjoying a period of unprecedented success.

The company grew 17% through the financial year 2002-03 and invested a whopping $1.5 billion (806 million [pounds sterling]) in research and design last year in order to realise some very ambitious objectives.

With the company divided into three roughly equal divisions encompassing telecoms equipment, digital display devices and domestic appliances, new chief executive S S Kim is confident that it will be numbered among the world's top three manufacturers in each of these sectors by 2010. More impressive still is the boast that LG Electronics will become the world's largest domestic appliance manufacturer next year.

Anthony H Moon, director of investor relations speaking at LG's Twin Towers head office in Seoul, comments: "Company revenue has increased by 13% on average in the past three years, driven mostly by our handset and domestic appliance businesses. By moving our low-end production to China and by creating more upmarket products in Korea, we have moved profitability up to 6.5% from just 4% three years ago."

Mr Moon attributed the company's bullish prediction of its leadership in the domestic appliance market to the anticipated growth in digital networked white goods. This market has exploded domestically and for many Korean families having your refrigerator, microwave oven, washing machine and air conditioning system fully networked and remotely controllable by an Internet browser or a TV is nothing new.

Indeed, it is television-based devices rather than the PC that the company predicts will be the hub of the networked home of the future, be it the TV itself, a set-top-box or even a games console.

"We don't mind which sort of device becomes the controller of choice, as long as it is centred on the TV," said Mr Moon. "We may have an LG disc for, say, a PlayStation2, which will allow it to control your LG home appliances."

Although the LG Internet refrigerator has been available in the UK for nearly two years, it has lacked a 'must-buy' application and been more of a flagship exercise. The introduction of the other three products in the line-up, under the LG HomNet branding in Korea, may well open up a market for these appliances, particularly as LG has developed a communication protocol allowing each unit to 'talk' to the others and the outside world autonomously.

The Living Network Control Protocol (LnCP) has been developed specifically for products that exchange small amounts of data and require minimum control, and allows communication over a home's ring main power supply. Moreover, LG is working to integrate this protocol with other home networking systems, such as Microsoft Universal Plug and Play (UPnP), Sony's Home Audio Video Interoperability (HAVi) and Sun Microsystems Jini.

CALLING THE TUNE

The mobile phone handset business took off in earnest in 2001 for LG and came to fruition with a number of key operator deals throughout 2002, propelling the company to the world's sixth largest handset manufacturer. It overtook Sony Ericsson worldwide last year, moving into fifth place, and has launched a number of very appealing GSM phones in the UK for 2004. While the focus remains on GSM and GPRS data, for the time being the company aims to be an early leader in 3G handsets worldwide.

"I think Europe will go to 3G earlier than people think as more and more people are using data," says Mr Moon.

"The European market will grow significantly from 2005 when there will be 80-90% coverage and more operators have nationwide services. We have an accelerated roadmap for 3G products and plan to launch three 3G models in 2004 and at least one more early into 2005.

"We have taken prototypes of these models to the UK and have had very positive feedback from operators planning to launch 3G services this year," he added.

One of LG's unique selling points for its handsets is design, and models such as the 6100 and 7100 have won many admirers, particularly among the fashion-conscious teen sector. As consumer choice in this sector is dictated by the look and feel of handsets as much as the communications and functionality, the 7100's clam-shell design with side-facing camera and swivelling display have made it one of the hottest phones on sale this winter.

Moreover this model has an organic EL display (similar to OLED) on the outside--the first mass-market consumer product to feature this technology.

Soon to be launched across Europe, LG's first smart phone features a 400MHz processor and 192MB of memory. Combining a mobile handset with a PDA interface the LG-KC8000 will run Windows Pocket PC 2003 and has what is claimed to be the world's first smart phone to have a CCD-type megapixel camera built-in.

The handset slides apart to reveal the keyboard and has a 2.8in LCD display. Billed as an 'intelligent multifunction device', users will be able to capture video, edit photos, e-mail and download/play MP3 files in addition to the relatively mundane GSM phone and PDA functionality.

DIGITAL TV

While the company's 76in plasma TV certainly catches the attention in LG's head office showroom, brand dominance in digital television across all technologies is LG's ultimate goal.

Already a significant player in digital TV (IDTV) in its domestic market, Digital Display Division president Nam-Kyun Woo has earmarked a $1.35bn investment to make LG the world's number one in this sector as early as next year:

He is confident that "by 200S LG will have a global leading 20% share of the digital TV market, achieved by building on our base in key display technology".

Since 2001, the global digital TV market has been growing at more than 30% a year. In a recent economic trend briefing, research company SERI predicted that the market could grow to more than 20 million units and be worth $26bn by 2005.

Clearly IDTV is not yet a boom sector in the UK after our rocky start in digital broadcasting, but LG was one of the first to market an IDTV on these shores. It is now determined to create consumer association between the concept of digital TV and the LG brand. To this end, the company is promising "greatly strengthened brand promotion to etch in consumers' minds LG's image as a technology leader in digital TV".

Current Korean domestic market IDTVs from LG are marketed under the Xcanvas brand and offer LG's eXcellent Digital Reality processor--or XDRpro. This technology combines error correction circuitry, a motion adaptive scaler (line doubler), automatic brightness processing, digital noise elimination and digital colour correction.

XDRpro technology will be introduced across the company's range of plasma, LCD, rear-projection and CRT TVs and will go head-to-head with the likes of Philips's pixelPlus technology.

PERVASIVE

A trip south of Seoul to the Gomi industrial area underlines quite how pervasive LG Electronics is in Korea. Block after block of factories and offices proudly display the LG signage--and this from a company with the greatest proportion of its manufacturing now based in China.

Many of the hangar-sized buildings have a clean room environment with the air continually filtered and fully automated robots navigating silently around sealed assembly machines.

The precious few employees are fully enclosed in white "space" suits and engaged in cleaning or quality control. It is not until the display panels are installed into cabinets that the scene returns to a traditional assembly environment. Terms like sleek and efficient don't do these majestic production facilities the justice they deserve.

The buoyant market for LCD and plasma TVs has already created a world shortage, but LG is planning to address this shortfall by opening both another fifth-generation LCD line and a new plasma facility at a building across the road this year.

"We predict the PDP market to increase by 83% in the next three years to reach over 10 million units a year," said Mr Moon. "The PDP market barrier is manufacturing technology and it is all about increasing yield. With our new facilities we are aiming for 25% market share worldwide by 2006."

The joint LG and Philips LCD production venture is no less at the forefront of manufacturing technology recently becoming the world's first plant to output two million large (10in and above) liquid crystal display panels a month.

The factory claims to have hit production yields of over 80%, which has greatly reduced manufacturing cost and increased production rates over the past 12 months. Plans are also in progress to develop and install both sixth and seventh generation LCD panel production lines at an estimated cost of $3bn over the next few years.