Some analysts believe Samsung may merge the more profitable OLED business with its LCD operation and convert part of LCD production capacity into OLED manufacturing lines.
In the future, whether that be this year or years from now, there is little doubt Samsung will shift its focus from LCD to OLED for its TV business. So long as OLED is new and can generate more profits for Samsung.
The Chosun Ilbo reported on Tuesday in an unsourced report that Samsung was considering spinning off its LCD business, which incurred more than 1 trillion won ($891 million) in operating loss in 2011.
There are pros and cons to being vertically integrated and trying to supply to other customers. If the Samsung brand is strong so will the LCD business, and vice versa. At the same time the LCD business will have a hard time selling to others when most of the output goes to Samsung-branded products. Other brands, especially those who compete with Samsung, might not get the steady stream of LCDs they need. Spinning off the less profitable LCD business so it can focus on supplying its non-Samsung-branded customers might be an interesting business maneuver. Then Samsung can focus on the more profitable OLED business.
Update 2012.02.19: Jun Yang, Bloomberg:
The new company, provisionally named 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.
Update 2012.03.16: Dieter Bohn, The Verge:
Samsung is moving full steam ahead with its plans to spin off its unprofitable LCD-making division into a separate, fully-owned subsidiary. The company’s shareholder have approved the move, which means that on April 1st we should see a new company called “Samsung Display Co.”
Update 2012.04.01: BusinessWire:
Samsung Display Co., Ltd, a global leader in display panel technologies and products, announced today that it has been officially launched as a new corporation, spun off from Samsung Electronics. Samsung Display held its inauguration ceremony yesterday and will begin business operations in earnest after carrying out incorporation registration on April 3.
Update 2012.07.02: Samsung Display opened up for business today.