After eight years' coalition through joint venture, LG IBM PC, IBM and LG Electronics announced their decision to dissolve the company.

 

Differing standpoints helped bring about the division: LG feels it must independently expand its PC business to support its efforts in the home networking segment; IBM finds the joined resources with LG insufficient to rival Samsung in the Korean PC market. Furthermore, the large-sized servers IBM has been manufacturing independently are fighting for an overlapped market segment with the servers it's been producing with LG.

 

The union will split in October at the earliest, and in December at the latest. Nonetheless, both sides expressed interest to further exchange technologies and cooperate on large-scale projects in Korea. Following the separation, IBM Korea and LG will respectively take over the ThinkPad and Xnote notebook lines.

 

Earlier in 2004, LG IBM PC was hit with a bribery scandal, which fined three of its former employees and jailed three of IBM Korea's former executives for manipulating bids and bribing government officials. But any connection to the separation has been denied.

 

LG IBM PC was established in 1996, with IBM holding a 51% stake, and LG 49%. IBM had planned to leverage its alliance with LG, a renowned Korean player, to facilitate entrance into the booming Korean PC and server market, while LG had intended IBM to help it strengthen its PC business. Currently, LG IBM PC is one of the leading firms in the Korean server and PC industry.