LG Electronics may be forced to cut phone prices

South Korea's LG Electronics may have to cut its handset prices if global leader Nokia moves first to do so, according to an AFP report.

LG's share price fell sharply this week amid market talk that Nokia may cut its prices for certain models by up to 20% to grab some customers away from ailing US rival Motorola, the AFP report added.

The speculation fueled worries that South Korean handset makers may be forced to follow suit at the expense of profitability.

'Price competition is inevitable unless we can create a unique value to differentiate (our products) from Nokia's,' LG Electronics vice chairman and CEO Nam Yong told reporters.

'That's the market principle. (But) we will try to attract new customers with competitive products rather than cheap prices,' he said.

LG took over Sony Ericsson's place as the world's fourth-largest handset maker in the first quarter.

Nam said LG's handset business will be able to post more than a 10% operating profit margin in the second quarter.

'Our priority is the premium market. Once we build a presence in the segment, then we move to the low-end handset market. This is how we will preserve our solid profit base,' he said.

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