Samsung Electronics Co. said Monday that it has agreed to end its joint liquid crystal display venture with Sony Corp. as the global panel industry continues to struggle with a prolonged downturn in TV demand.
The Korean firm decided to buy Sony’s entire stake in the joint venture, S-LCD Corp., for 1.08 trillion won ($939.6 million), it said in a statement. The deal is expected to be completed by the end of next month, pending regulatory approval.
Even though the joint venture will come to a close, the two companies plan to continue strategic partnerships, and Samsung will keep supplying LCD panels to Sony, they added.
The decision comes amid a prolonged slump in the global panel industry, as weak TV demand in advanced economies pummel LCD panel prices.
Sony’s TV operations continued to suffer quarterly operating losses, hit by a slump in LCD TV demand. Samsung, the world’s largest LCD panel maker, merged its LCD unit with its semiconductor division earlier this year, in a bid to help facilitate a faster turnaround.
S-LCD was established in 2004 to produce large-size LCD panels for TVs, as Asian TV makers expected that flat-screen TVs would become mainstream.
The joint venture, initially capitalized at 3.3 trillion won, was a leading player in the race to develop large-size LCD screens for TVs, backed by the largest TV makers of the two countries.
Samsung said that the decision to close the joint venture would help the two tech giants move more nimbly in the fast-changing industry. For Sony, it can secure cash from the termination of S-LCD, while having a secure supply of LCD panels from Samsung.