South Korea's LG Electronics said Tuesday it may have to cut its handset prices if global leader Nokia moves first to do so.

LG's share price fell sharply this week amid market talk that Nokia may cut its prices for select cellphone models by up to 20% to grab some customers away from U.S. rival Motorola.

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.

Source:Dow Jones Newswires