SAMSUNG ELECT LTD (F) (SSNLF) Looks To Boost Component Sales By Investing $3.6 Billion In New OLED Production Line
Smartphone giant SAMSUNG ELECT LTD (F) (OTCMKTS:SSNLF) has approved the investment of $3.6 billion for the making of organic light emitting diode OLED panels by Samsung Display. The investment comes in the wake of the South Korean giant seeing its earnings from the smartphone business affected by immense competition.
A Samsung display spokesman has already confirmed to Reuters the investment, which will be used for the production of medium and small-sized OLED displays that are to be fitted in smartphones and tablets. The investment is to be spread between 2015 and 2017.
SAMSUNG ELECT LTD (F) (OTCMKTS:SSNLF) has seen its smartphone earnings severely affected by immense competition in the space, especially from Apple Inc. (NASDAQ:AAPL), which is making big returns with iPhone 6. The first line of production will see the realization of curved panels similar to those in the Galaxy Note Edge that Samsung Electronics hopes will be enough to win back customers.
Apple Inc. (NASDAQ:AAPL) strong sales in China in the fourth quarter saw it surpass SAMSUNG ELECT LTD (F) (OTCMKTS:SSNLF) as the world’s top smartphone maker. The production of the displays could offer the company another avenue for revenue as more competitors try to play the catch-up game through by use of curved screens.
Samsung is not new to investing big in the components business. The company is expected to start the construction of a 15.6 trillion won chip plant in its homeland. The plant is to be completed in the second half of 2017.
The ongoing wave of investments is expected to suppress SAMSUNG ELECT LTD (F) (OTCMKTS:SSNLF) capital returns. There is already concern that the increased investments this year could result in the company’s dividend payout falling something that is not expected to go well with investors at the back of the ongoing decline in smartphone returns.
SAMSUNG ELECT LTD (F) (OTCMKTS:SSNLF) is not the only electronics company betting big on the future with new projects. LG Display Co Ltd is also reportedly planning to invest between 1 trillion won and 1.2 trillion for the expansion of its large-panel OLED production line.
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