Samsung Electronics is spinning off its LCD display manufacturing business and merging with its smaller LED display unit in a move that is a testament to where the future of TVs and mobile screens is headed.
The South Korean company announced the decisions on its website on Monday, both choices having been approved by Samsung's board of directors earlier in the day.
"Currently, the display market is undergoing rapid changes with OLED panels expected to fast replace LCD panels to become the mainstream," Samsung said in a statement. "Amid this structural change of the display industry, adopting measures for change and innovation, including business restructuring, are essential to improve our competitiveness for our display business."
Samsung's LCD business -- which until last December was a joint venture with Sony that built displays for TVs and computers -- will officially become a standalone corporation, wholly owned by Samsung, on April 1.
After the spinoff is complete, "the new corporation will consider adopting various restructuring measures including a merger with Samsung Mobile Display and S-LCD Corporation," Samsung said, acknowledging that more cost-cutting moves are on the way.
The spinoff comes as consumers are increasingly purchasing LCD-backlighted TVs, computer monitors or mobile devices and LED-backlighted screens are becoming more popular and less expensive to produce.
At the same time, demand for LCD displays is still growing, particularly in larger screen sizes, according to data from the research firm DisplaySearch.
Also set for April 1 will be the merger of Samsung's growing LED display-making business, which is currently a wholly owned and stand-alone company, into Samsung Electronics.
The merger is taking place "to nurture the LED business as the future growth engine of Samsung Electronics' component business" by allowing the smaller unit to be able to more easily take advantage of its parent company's resources in development, manufacturing and sales, Samsung said.