Samsung Electronics, the world's largest maker of flat-screen TVs, expects to spin off its money-losing LCD unit as a new corporation after the company's board of directors approved the plan today.
The new entity, which will be a wholly owned subsidiary of Samsung, will be called Samsung Display Company and switch the company's focus from LCD panels to OLED panels. The spinoff, which still requires shareholder approval, is expected to launch April 1 and make it more competitive in the face of falling demand.
"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 a 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 competiveness for our display business."
Samsung's LCD business has been pummeled during past couple of years, as the costs of producing panels failed to at least match the market upside. In 2011, the operating loss for the company's LCD business hit nearly $900 million.
Annual global sales of liquid crystal TVs are expected to decline by 8 percent to $92 billion by 2015, market research company DisplaySearch reported last month. Meanwhile, the market for OLED TVs is expected to reach $20 billion by 2018, accounting for 16 percent of the market.
However, it's unclear what the move will mean for Samsung's S-LCD business. In a $940 million deal that was completed last month, Samsung acquired Sony's share of the business, which produces LCD panels for televisions, mobile phones, and other consumer electronics.