Just a few days after it was rumored that Samsung was planning on spinning off its LCD display business, the company has decided to do just that.
A new company called Samsung Display Co. will launch on April 1, with capital of $668 million. Samsung will be in control of all shares of the business.
In its most recent annual report, Samsung reported an operating loss of 750 billion won ($669 million) in its display panel business, although in other segments of the company, like its mobile unit, it fared incredibly better.
Last week, Samsung said, “We are considering various options to strengthen the competitiveness of the LCD business.” It said it could spin off the unit altogether. It didn’t take long to decide that was indeed the plan.
In addition to creating LCD displays for its own products, Samsung manufactures displays for other companies, including ones that are direct rivals of Samsung.
The LCD market was once a booming and thriving business, but over time it has become over-saturated with prices pushed so low barely anyone can make a decent margin, and a lack of differentiated products makes it tough for anyone to stand out.
In the mean time, Samsung has been focusing on organic LED, or OLED, which offers significantly brighter, thinner, more power-efficient, and more graphically powerful displays, and it’s a market where Samsung has a much stronger chance of making a real mark.
By spinning off this segment into its own company, Samsung will be able to re-focus its efforts and work to become profitable once again.
