Samsung Display is spinning off its successful OLED business ahead of OLED iPhones

iPhone 7 Plus mockup Jermaine Smit 008

Samsung Display, a subsidiary of Samsung Electronics, recently won a deal with Apple to supply its high-quality OLED panels for use in the next iPhone and now the South Korean company is spinning off its organic light-emitting diode (OLED) unit, The Korea Times reported Monday.

Samsung Display reported a 270 billion won (about $235.2 million) operating loss during the first quarter of this year due to the struggling LCD business and strong competition from Chinese makers of low-cost LCDs for mobile devices.

Some Samsung Display’s workforce will reportedly join the newly spun-off OLED unit.

“The latest decision was part of the ongoing Samsung Group-initiated efforts to restructure unprofitable businesses,” said an unnamed company official.

“Now, Samsung is initiating an exit strategy for LCDs, which are no longer promising and have become unprofitable,” the official said.

The shake-up comes at a time when Samsung is accelerating its efforts to move away from LCDs to the more expensive OLEDs for mobile devices. Some of the group’s existing LCD facilities could shut down and the remaining production lines, including the L7 in the local city of Cheonan, might even be sold to unidentified Chinese firms.

According to a Nomura Securities research, OLEDs will be accounting for a third of all smartphone displays by 2018.

LG Display, Japan Display, AU Optronics, Samsung Display and Foxconn-owned Sharp are said to share production of AMOLED panels for future iPhones, with Samsung alone predicted to provide an estimated 240 million AMOLED units in the next three years beginning in 2017.

Moving away from the premium LCD IPS display technology to embrace OLED would permit a future iPhone to deliver crisper colors, deeper blacks, increased brightness, high visibility under direct sunlight and reduced power consumption.

Source: The Korea Times