Only last week Samsung hinted at the possibility that it could be spinning off its LCD division following poor financial results and today a filing by the company has confirmed this is indeed the plan.
Samsung will spin off its unprofitable LCD division into an affiliate company provisionally called Samsung Display Co. which will be set up on 1 April with paid-in capital of 750 billion won (£420 million).
The LCD division of the South Korean company made an operating loss of £565m in 2011 as a result of weakened demand for TVs around the globe and strong competition from cheaper Chinese models. While the LCD division of the company may be seen as the past, it is OLED technology which is very much seen as the future for the company.
According to James Song, an analyst at Daewoo Securities Co., who spoke to Bloomberg, Samsung may look to merge the new spin-off company with its Samsung Mobile Display venture, which makes OLED panels: “It’s a good decision for Samsung Electronics. The long-term direction for their display business is going OLED. They can improve efficiency of investment by combining similar businesses.”
While OLED panels are currently only seen in smartphones, we expect to see Samsung and LG launch TV sets using the technology by the end of the year, however with prices likely to be somewhere in the region of £7,000-£8,000 for a 55in set, it may be some time before OLED becomes mainstream.
Samsung is expected to invest around 5 trillion won (£2.8bn) in its OLED production this year with the OLED display market set to grow to around £12bn by 2018, accounting for 16 per cent of the market, from its current position of just four per cent of industry-wide revenue.