Samsung Electronics, the world’s largest maker of flat panels, said it is taking the official steps to spin off its unprofitable liquid-crystal-display or LCD manufacturing business into a separate firm—Samsung Display Company—as worldwide demand for LCD panels declines.
The new company, the aforementioned Samsung Display Co., will be set up April 1 with paid-in capital of 750 billion won ($668 million), Samsung said in a filing today. The South Korean company announced the decisions on its website on Monday, both choices having been approved by Samsung’s board of directors earlier in the day.
Samsung’s LCD business — which until last December was a joint venture with Sony that built displays for TVs and computers. Samsung bought out Sony’s half of the joint venture for about $935 million.
“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. “Currently, the display market is undergoing rapid changes with OLED panels expected to fast replace LCD panels to become the mainstream,” the company said in the statement announcing the move. “Amid this structural change of the display industry, adopting measures for change and innovation, including business restructuring, are essential to improve our competitiveness for our display business.”
The spin-off comes as LED-backlighted screens are becoming more popular and less expensive to produce.