Samsung Separating from Struggling LCD Business

On Monday, the tech rumor mill got another one right.

Following months of speculation, Samsung has confirmed plans to “spin off” its struggling LCD manufacturing business into a new company effectively early April.

The new business, tentatively dubbed “Samsung Display Co.” hasn’t yet been sanctioned by Samsung shareholders, but the effort is widely expected to be embraced out of necessity if nothing more.

As Bloomberg reported early Monday, Samsung said that “structural change” is necessary for the company to rebound from recent difficulties in the display business.

Outside observers and analysts see those “difficulties” stemming from a much broader change in the display market.

LCD screens are quickly losing their luster in favor of improved consumer demand for OLED televisions. Current industry estimates call for the LCD television sector to endure a global sales decrease of 8 percent by 2015. By 2018, OLED televisions may represent 16 percent of the television market – up significantly from today’s 4 percent.

“It’s a good decision for Samsung Electronics,” says James Song, an analyst at Daewoo Securities Co. “The long-term direction for their display business is going OLED. They can improve efficiency of investment by combining similar businesses.”