Samsung (News - Alert) Electronics said on Wednesday it is considering spinning off its liquid crystal display (LCD) business to focus more on the next-generation display technology that will replace LCD TVs.
“The company is considering spinning off its LCD business, but nothing has been decided yet,” said Samsung in a regulatory filing.
The possible move from Samsung isn’t surprising seeing as how the LCD industry has hit a slump since the second half of 2010.
In December Sony Corp., which Samsung had a joint LCD venture with, announced that due to the possible loss of $2.2 billion in their television sales, they would no longer be working with Samsung Electronics.
Low-cost competitors from Chinese manufacturers haven’t helped the situation either and according to industry studies the LCD industry is set to become a low-growth commodity type technology.
“New LCD production lines established by Chinese vendors are a major reason why the industry remains in an over-supply situation,” Annabelle Hsu of IDC (News - Alert) told the BBC.
News reported earlier states that Samsung Electronics is seeking out new opportunities for itself and is considering merging with Samsung Mobile Display, an affiliated company which produces advanced digital screens.
According to The Korea Times, industry sources believe the company is moving to create a comprehensive parts division to handle operations related to light-emitting diodes (LEDs) and organic light-emitting diodes (OLEDs) within this year.
OLED panels are considered thinner, more power-efficient, brighter and the next popular generation of flat-screen TVs amongst consumers. According to estimates provided by BBC, Samsung’s OLED revenues are expected to increase by nearly 600 percent by 2014.
Although Samsung noted in the regulatory filing that no decision has been made yet, a Samsung executive told The Korea Times that the absorbing of Samsung Mobile Display and Samsung LED will allow the company to benefit from economies of scale and better handle demand from overseas clients.
“It is natural for the spin-off to bring about the merger between Samsung's LCD business and SMD. Samsung has no reason to run the two divisions separated as the SMD plans to expand into TV business with the launch of AMOLED TV this year,” said Park Young-joo, an analyst at Woori Investment & Securities. “The lineup of the LCD business can be changed into the one for the AMOLED, boosting the efficiency of the business.”
Despite low LCD sales, Samsung Electronics recently reported a 17 percent jump in fourth-quarter profit due to strong smartphone sales. The top television maker also noted that shipments for the smartphone rose by 30 percent, compared to its third-quarter.
Jordan Eggers has five years of writing experience and has written pieces for various print outlets and websites. Currently living abroad, she is working as a freelance writer and enjoys keeping up-to-date on everything new happening in technology.
Edited by Jennifer Russell