As LCDs suffer, Samsung sees new unit as remedy

Samsung Electronics said yesterday it will spin off its LCD business to beef up its competitiveness in the fast-changing display sector.

Samsung Electronics said in a statement that following an envisioned spin-off, a new entity, provisionally named Samsung Display, will launch on April 1 with capital of 750 billion won ($667.3 million). The move is subject to shareholders’ approval at a meeting next month.

“The spin-off will allow us to make quicker business decisions and respond to our clients’ needs faster,” Donggun Park, head of the LCD business, said in a statement.

The move came as the electronic company’s LCD business suffered losses for the fourth straight quarter at the end of 2011 amid industry-wide slumps.

Market watchers said the new entity may merge with Samsung Electronics’ organic light-emitting diode (OLED) display-making unit, Samsung Mobile Display (SMD).

This is a 50-50 joint venture between Samsung Electronics and its affiliate Samsung SDI. The company mainly produces OLED displays for mobile devices such as smartphones.

SMD is responsible for more than 98 percent of global OLED shipments, and experts predict its leadership will continue for several years.

Samsung Electronics’ LCD operations have focused on producing large-screen flat panels, an area that has suffered from setbacks recently as market gains have been centered on small mobile devices. Sluggish sales of traditional TV sets amid the global economic slowdown have also hurt Samsung’s LCD business sector.

Samsung Electronics and other display makers are now setting their sights on producing OLED displays, which are mainly used in smartphones, as more customers turn to mobile devices.

“A potential merger between the spun-off LCD business and Samsung Mobile Display seems to be aimed at strengthening competitiveness before the competition for OLED TVs heats up,” said Dori Lim, an analyst at Solomon Investment & Securities.

Some pundits predict LCD TVs will be out of fashion within a couple of years as OLED takes center stage.

The OLED technology allows for thinner screens because its pixels directly emit light, meaning there is no need for separate backlights, as is the case with LCD TVs. It also offers a greater contrast ratio and viewing angle, and it is believed to offer a response time up to 200 times faster.

Samsung and LG unveiled the world’s first 55-inch OLED TV at the four-day Consumer Electronics Show in Las Vegas last month.

Meanwhile, Samsung Electronics kept its grip as the world’s leading TV maker for a sixth consecutive year in 2011. According to figures released by DisplaySearch on Sunday, Samsung held 24 percent of the global market, up from 22 percent in 2010.

The second-largest TV maker, LG Electronics, had 14 percent of the market, followed by Japanese makers Sony (10 percent), Panasonic (7.7 percent) and Sharp (6.7 percent).

Yonhap