The Sony-Samsung LCD screen joint venture has announced plans to cut capital by $555 million in a bid to reorganise its capital structure.
The company, which was floated in 2004 in South Korea to take advantage of the LCD boom, said that its plans to cut its share to 660 million won from 780 million, bringing the capital down to 3.3 trillion won from 3.9 trillion.
A spokesperson for Samsung said that the reason behind the cut in capital was that the venture had excessive cash, but analysts believe that Sony and Samsung both realise that the global LCD market is slowly faltering, giving way to new display technologies.
Sony’s TV business has been hit by continuous losses over weak LCD demand in Japan and around the world and Samsung is planning a strategic shift to new types of display technologies like AMOLED, which can be found on high end Smartphones and tablet devices.
“Sony has bought around 1.1-1.2 million units of LCD panels every month from the venture but it can't buy that much anymore due to weak sales in Japan. With the overall demand for LCD displays set to shrink further, Samsung and Sony are likely to gradually wind up the business and focus instead on OLED,” an analyst with Kiwoom Securities told Reuters.