Samsung has confirmed it is spinning out its LCD business in a calculated bet to keep its core business profitable. The new business will be known as Samsung Display.
Samsung’s board has approved a plan to spin off its liquid crystal display (LCD) division on 1 April. Samsung Display will start out with working capital of US$667m.
However, the move still needs shareholder approval. In the interests of profitability, it is likely to pass as falling demand and prices of LCD displays have been hurting profits.
The LCD market has become heavily commoditised and other manufacturers are struggling with their LCD divisions. Sharp, Samsung, Sony and Panasonic dominate the low-cost LC TV market.
Instead, Samsung would rather focus on profitable areas like tablet computers and smartphones, such as the Galaxy Tab and Galaxy S, which use OLED displays.
“The spin-off will allow us to make quicker business decisions and respond to our clients’ needs more swiftly,” said Donggun Park, executive vice-president and head of Samsung’s LCD business.
“Through enhancements in business competitiveness, we will continue to provide superior products and services for the market,” Park added.
