Samsung Display will soon sell its Suzhou liquid crystal display (LCD) plant (JUNG YEON-JE/AFP/Getty Images)
South Korea’s Samsung Electronics decided in December last year not to exit the liquid crystal display (LCD) industry for the Time being, but its Samsung Display company (Samsung Display) plans to sell its Suzhou LCD plant. The sale plan was recently approved by the South Korean government, meaning that the sale is about to start.
Samsung’s LCD production line in Suzhou uses the 8th.5 generation LCD technology, which is a core national technology and therefore requires approval. Samsung Display applied to the government for the sale of the Suzhou plant several months ago.
On Feb. 5 Samsung Display confirmed that South Korea’s Ministry of Industry, Trade and Resources has approved the sale plan.
Suzhou Samsung Electronics Liquid Crystal Display Technology Co., Ltd. was established in 2011, with Samsung Display taking 60% of the shares, Suzhou Industrial State-owned Investment Holding Development Co., Ltd. taking 30%, and Huaxing Optoelectronics Technology Co.
TCL Huaxing will take over Suzhou Samsung Electronics LCD Technology Co.
TCL Huaxing had announced on August 29, 2020 that it plans to sign the Equity Transfer Agreement and the Capital Increase Agreement with Samsung Display Company, and TCL Technologies plans to sign the Inter-Shareholder Agreement with Samsung Display Company.
According to the above agreement, Samsung will sell 60% of the equity of Suzhou Samsung Electronics LCD Technology Co. and 100% of the equity of Suzhou Samsung Display Co. for a consideration of approximately $1.080 billion.
In the first half of last year, there was news of Samsung’s imminent exit from LCD production capacity, and in December of the same year, Samsung said it would postpone its exit and continue to produce LCD until the end of 2021.
Currently, Samsung Display’s LCD business in Vietnam has six plants and two research and development centers. Samsung Electronics has a total investment of about $17 billion in Vietnam and had relocated some of its smartphone production lines from the mainland to Vietnam in 2019.
South Korean companies are continuing to leave the mainland market in recent years. In addition to Samsung, there is LG Electronics’ decision in August 2020 to shut down the brick-and-mortar business of Suning Appliances and gradually withdraw from stores in Gome Electrical Appliances stores, and both Kia Motors and Hyundai Motor had gradually withdrawn from the mainland before the Epidemic.
The sudden epidemic from 2019 to 2020 has even led to the shrinking performance of Korean companies in the mainland. A report by the Korea Industrial Research Institute (KIRI), cited by Yonhap News Agency on Feb. 7, reported that 54.6 percent of Korean companies surveyed in China in 2020 will have lower sales than the previous year, and about 40 percent will be operating at less than 60 percent, while only 25.6 percent will be operating at more than 80 percent.
The report comes from a survey conducted by the Industrial Research Institute, the Korean Chamber of Commerce Beijing Office, and the Korea Chamber of Commerce in China from September to November 2020 on the business situation of 480 Korean companies in China.
The companies surveyed said that factors such as weak demand on the mainland, increased competition, the epidemic and lower export demand have led to a decrease in sales.
58.6% of the companies surveyed expect the business environment on the mainland to deteriorate in the future, with major factors including Communist government policies, rising production costs, and changes in the demand market.
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