Samsung (PINK:SSNLF) is overhauling its TV business, and may spin off its lower-end LCD TV production to focus on OLED technology.
The move comes in the wake of a $891 million loss in Samsung’s LCD (liquid crystal display) division and the company’s decision last year to end its LCD-production venture with Sony (NYSE:SNE). Nonetheless, some analysts think that Samsung may be preparing to spin off its LCD business or enter into some sort of merger with Sony.
A merger could help both companies cut costs and better compete with Chinese manufacturers and rival LG (PINK:LGEAF). Although by the end of the fourth quarter LG had posted a second straight quarterly loss, its TV division had an operating profit of $130 million and record shipments of 8.8 million units during the period, thanks largely to demand for its higher-end models over the holidays.
Earlier this month, Samsung said that it may fully take over its unlisted OLED making unit, Samsung Mobile Display. Sony, meanwhile, says it is focused only on professional OLED monitors and has no plans to make OLED TVs for the consumer market. With no direct competition from each other in the OLED sector, an alliance between Samsung and Sony pegged to OLED development and production could improve the companies’ overall chances of success in the TV and monitor markets.
Weighing the economic outlook and competitive pressures
With hope that an improved U.S. economy will boost TV sales here, and talk of Apple (NASAQ:AAPL) offering its own TV, Samsung obviously believes it’s time to get more creative. OLED technology, which is more commonly used in smartphones, would support that strategy because key features of OLED technology have the potential to shake up the TV-screen business.
OLED TVs are brighter, thinner, and have better refresh rates than LCD TVs. They also use less energy. That’s especially true for TVs that feature active-matrix OLED (AMOLED) technology, which is used on phone screens but also provides high resolution on larger displays while using relatively little power.
One of the biggest advantages of OLED, though, is that it is not limited to rigid, glass screens: it can accommodate a variety of curved configurations—screen shapes markedly different from the flat rectangular surfaces available today.
Both Samsung and LG are getting ready to produce flexible, shatter-proof OLEDs based on durable polyimide plastic, with Samsung promising to deliver its first OLED TV this year.
Samsung also is eyeing the “Smart TV” market. Smart TVs, also known as Connected TVs, allow consumers to access the Internet, watch online videos, and play games. Many industry watchers believe Smart TVs will be the next frontier for Apple and other competitors, and Samsung expects Smart TVs to account for 25 million of the 50 million units it hopes to sell this year.
