Samsung plans US$2b investment to drive AST into big league

Samsung Corp will invest US$2 billion to transform its flagging PC subsidiary, AST Research, into one of the world's top five personal-computer makers by 2005.

AST, which was bought out by the South Korean diversified giant in August, will take over all of Samsung's computer sales outside of Korea and Japan. It also will implement a form of build-to-order system to cut manufacturing costs and increase profit margins.

'We are a totally different company in terms of management, financial stability and product availability,' AST's Asia president Hoon Choo said.

'It is good that they have a turnaround plan,' said Cherry Velarde, Dataquest Asia's PC analyst. 'I think they have good potential with Samsung backing them.' Founded in 1979 by three engineers - two Chinese and one Indian - southern California-based AST ranked as one of the top 10 PC-makers in the world three years ago.

However, the firm was less adroit than many of its rivals in the fast-changing PC business and has reported 12 consecutive quarters of financial losses, including the quarter to March 29 this year.

As a wholly owned subsidiary of Samsung, AST Research no longer will report quarterly financial results.

Samsung was the top PC-seller in Asia last year, excluding Japan, according to technology consultancy IDC. Mr Choo said 98 per cent of sales were in Korea, where PC sales have fallen due to the troubled economy.