Samsung Board Approves LCD Spin-Off
Last week, Samsung Electronics announced that they were considering spinning off their liquid crystal display operations by merging it with their Samsung Mobile Display arm which makes organic light-emitting diode or OLED panels.
The company, though the largest maker of flat panels, suffered decreasing sales in their LCD operations as more people are now embracing OLED TVs. The LCD business had an operating loss of 750 billion won ($666 million) last year. The decision for a spin-off came as Samsung wants to focus more on making thinner, brighter TVs.
Contrary to earlier reports, the spin-off will give rise to a new company, Samsung Display Co., which will be set up on April 1 with paid-in capital of 750 billion won ($668 million). There’s a possibility that in the long run, the Samsung Display Co. will be merged with the Samsung Mobile Company.
“It’s a good decision for Samsung Electronics,” Seoul- based James Song, an analyst at Daewoo Securities Co. said in an interview. “The long-term direction for their display business is going OLED. They can improve efficiency of investment by combining similar businesses.”
The spin-off had been approved by Samsung’s board.
“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.”
Though the spin-off can be viewed as a way to remain highly competitive, one cannot be sure that it is the right move. It will take a few quarters for the company to be able to conclude if they made the right decision.
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