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LG Electronics has been described lately as the Qualcomm of the digital TV industry. That's because Qualcomm, a U.S. company, earns a sizable portion of its income from licensing key technologies to mobile phone makers. The Korean electronics giant is expected to do the same with its digital TV receiver technology.
An LG Electronics executive said on Tuesday that the company has started producing digital television set-top boxes (STBs) at its plant in China to be sold in the U.S. next month. Digital STBs convert digital TV broadcast signals to analog for people with analog TVs.
LG Electronics¡¯ move comes as an amendment to a U.S. broadcasting law is expected to provide the company with a huge business opportunity. The law requires that all U.S. TV broadcasts must be digital by February 2009. Digital TVs sales have been soaring this year, and the STB market is likely to pick up steam among people who still own analog TVs.
Around five companies are working to enter the STB market, including LG Electronics, RCA and EchoStar. Most industry experts predict that Zenith, a U.S. company owned by LG Electronics, will lead the market since it owns a key digital TV technology called vestigial side band (VSB). The LG Electronics executive said that the company has decided to release its STBs in the U.S. under the Zenith brand because of its good reputation for quality.
The activation of the STB market alone is expected to bring the Korean electronics giant a windfall, since Zenith will receive US$5 per set-top box from other STB makers who must license the VSB technology. If 30 million STBs are sold in the U.S. next year as predicted, Zenith will earn over W100 billion (US$1=W922) in royalties.
Digital TV makers also have to pay $5 per TV in licensing fees to Zenith. With next year's digital TV sales forecast at some 30 million units, the royalties are expected to generate considerable income for the company. LG said that it is very likely to benefit next year from Zenith, as it holds 100 percent of the company.
(englishnews@chosun.com )
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