Samsung to Launch Independent LCD Unit, CEO to Turn Around Appliance Divison
Jan 23, 2004
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Korea-based Samsung Electronics is to split its liquid crystal display (LCD) business from its semiconductor division.

LCD production has become the fastest-growing part of Samsung’s business during the past year, amid surging global demand for flat-screen televisions and monitors.

Samsung’s struggling home appliance division, which lost Won 100 billion (U.S. $84 billion) in 2003, also would be shaken up as part of the reorganization.

Samsung CEO Yun Jong-yong is to take personal control of the white goods business in an attempt to turn it around.

The plan was unveiled following Samsung’s announcement last week of a 24-percent jump in fourth-quarter profits, driven by strong sales of LCDs and recovery in the chip market.

LCD manufacturing is currently part of Samsung’s semiconductor operation, but the company said it would shortly have its own division and management team.

The move showed how LCDs have joined semiconductors and mobile phones as the company’s most powerful products.

Samsung has also announced plans to invest $2.3 billion in the world’s first seventh-generation LCD production line in a joint venture with Sony, its Japanese rival.

The capital expenditure is the first phase of Samsung’s planned $12-billion investment in LCD capacity during the next 10 years, as the company seeks to overtake LG Philips, the Korean-Dutch joint venture, as the world’s largest producer of flat-panel displays.

The appointment of Mr. Yun to take charge of the home appliances division -- in addition to his broader responsibilities for the whole company --underlined concern within Samsung about the plight of its most mature business.

Home appliances, such as washing machines and refrigerators, used to be Samsung’s core business, but the division suffered as the company shifted its priorities to more advanced and sophisticated electronic goods.

Last year, home appliances contributed 7 percent to Samsung’s sales, compared with 17 percent from LCDs and 28 percent each from semiconductors and mobile phones.

Samsung has in the past considered selling its home appliance operation, but recently said that Mr. Yun’s planned overhaul of the division showed the company remained committed to it.

Kyle Shin, analyst at Good Morning Securities in Seoul, South Korea, said Samsung wanted to keep the business because of the potential to connect home appliances to each other through a digital network.

"Samsung sees home networking as its next growth area, so it does not want to lose the home appliance business," Mr. Shin said. (Reuters)

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