Samsung sets date for LCD unit spinoff

Korea’s tech giant Samsung Electronics said yesterday that its shareholders approved the spinoff of its LCD business as part of moves to bolster its competitiveness in the money-losing sector.

At an annual meeting held in Seoul, shareholders passed a motion to create an independent display unit, the company said. The new company, provisionally named Samsung Display, will be launched on April 1 with capital of 750 billion won ($666 million).

Under the arrangement, Samsung Electronics will control 100 percent of the display company’s shares, while the new LCD manufacturer will inherit assets, debts, and other corporate and labor obligations.

Park Dong-gun, the current head of Samsung’s LCD business, has been tapped as the new president.

“The creation of a separate LCD company will allow it to make quicker business decisions and respond to our clients’ needs in a timely manner,” a company official said.

Samsung’s LCD business suffered losses for the fourth consecutive quarter in the last three months of 2011 amid industry-wide slumps.

The company’s LCD operations had focused on producing large-screen flat panels, which suffered from business setbacks as market gains have been centered on small mobile devices. Sluggish sales of traditional TV sets amid the global economic slowdown have also hurt profits.

Industry sources, meanwhile, said that once the LCD company is launched, it will likely merge with Samsung’s organic light-emitting diode (OLED) display-making unit, Samsung Mobile Display, in the first half of this year.

Samsung Mobile Display 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.

Meanwhile, the firm said it is bracing for tougher competition amid a struggling industry as it seeks to cement leadership in its main businesses.

“The electronics industry will enter a low-growth period,” Samsung CEO Choi Gee-sung said during the meeting. “Reorganization of the industry will gain speed, and competition among global players will intensify.”

The electronics maker posted record revenue last year.

Bloomberg, Yonhap