Samsung Display has sold off its LCD production line in Suzhou, China to TCL Technology, a Chinese display company. The move is in line with the company’s plan to wrap up production of LCDs by end of 2020 and accelerate development of QD displays, a next-generation display.
Samsung Display signed a contract to sell its entire stake in Suzhou production line to TCL Huaxing, a subsidiary of TCL Technology, for US$1.08 billion, the company said on Aug. 28. Samsung Display acquired a 12.33 percent stake in TCL Huaxing for US$739 million following the sale of the production line.
Samsung Display handed over a 60 percent stake in a fab in charge of front-end processes and a 100 percent stake in a back-end module production line at the Suzhou plant to TCL Huaxing.
Samsung Display held a 60 percent stake in the fab with the remaining 40 percent held by Suzhou Industrial Park (30 percent) and CSOT (10 percent), a subsidiary of TCL Technology and China’s second-largest display company. For this reason, TCL was regarded as a strong candidate for acquiring Samsung Display’s Suzhou LCD plant.
Samsung Display’s Suzhou LCD production line is the company’s only 8.5th-generation panel production line in China. Although the plant is currently capable of processing 120,000 sheets of glass per month, it is designed to handle up to 160,000 sheets per month. As it has been producing 32-inch, 55-inch and 65-inch products that are mainstream products in the market, its market value is also high. With the acquisition of Samsung Display’s plant, TCL Technology will have three 8.5th-generation lines and two 11th-generation lines. Amid the trend toward larger displays, TCL Technology can now seek to expand its share of the large display market without spending much time and money. The Samsung Display plant runs a module factory with a monthly production capacity of 3.5 million sheets.
Samsung Display wanted to wrap up its LCD business as it has been accumulating losses. As Chinese display companies have caught up with Korean companies not only in price but in quality, Samsung Electronics, a major customer of Samsung Display, is now using more panels from Chinese companies. Due to the accumulated deficits, Samsung Display had no choice but to put an end to the LCD business division.
However, Samsung Display also showed its intention to continue cooperation with Chinese companies in the LCD business by acquiring a stake in TCL Huaxing. While large panel markets are shifting towards OLEDs, LCD-based products still account for a high percentage of the display market. The sales gap between the LCD-based QLED TV group led by Samsung Electronics and the OLED TV group tripled in the second quarter of this year. One year ago, the gap was double.
Samsung Display will cut a chain of poor business performance stemming from the LCD panel business and step up its efforts to mass-produce QD displays. By the end of this year, the company will finish developing prototypes of QD displays and secure major customers.
Source: http://www.businesskorea.co.kr/news/articleView.html?idxno = 51084
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