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20 February, 2012

Samsung Electronics board approves LCD unit spin off

Samsung Electronics board approves LCD unit spin off

Samsung Electronics has moved a step closer to spinning off its Liquid Crystal Display (LCD) unit after its board of directors approved the plan.

The firm said it will launch the spun-off unit, Samsung Display Company Ltd, as a new corporation on 1 April.

The move, which still needs shareholder approval, comes amid slowing demand and falling profits for LCD products.

Samsung said it was planning to focus on new technologies to maintain its edge over the competition.

"The spin-off will allow us to make quicker business decisions and respond to our clients' needs more swiftly," said Donggun Park, executive vice president and head of Samsung's LCD business.

"Through enhancements in business competitiveness, we will continue to provide superior products and services for the market," he added.

'Commoditised business'
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It is unclear whether it's a good move or not - you never know until a few quarters have gone by”

Jasper Kim
Asia-Pacific Global Research Group
LCD manufacturers worldwide have been going through a tough time in recent years.

Not only has demand for the product been slowing, increased supply has also seen manufacturers slash their prices in a bid to attract consumers.

Analysts said that the sector had lost its niche factor and that had hurt electronics makers.

"LCD used to be one of the cutting edge technologies but it is now a commoditised business," Jasper Kim, chief executive and founder of Asia-Pacific Global Research Group told the BBC.

"It can be replicated and reproduced easily," he added.

Samsung is the world's biggest TV and flat screen maker and is likely to be affected the most by a slowdown in the sector.

Analysts said while the move was part of Samsung's efforts to ensure that it remained highly competitive, it was too early to say whether it was a step in the right direction.

"It is unclear whether it's a good move or not - you never know until a few quarters have gone by," Mr Kim said.

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