By Bahk Eun-ji
Samsung Electromechanics will exit the hard disk drive (HDD) motor business to concentrate on core businesses.
The decision comes a month after it said it would contemplate exiting non-core sectors.
The company, which sells components for handsets, such as wireless, network and camera modules, has said it planned to restructure unprofitable business units.
The restructuring comes after the company posted a 99.6 percent drop in 2014 profit, mainly due to sluggish sales of Samsung Electronics’ new flagship smartphones, the Galaxy S6 and S6 Edge, as the camera module is one of the firm’s core businesses.
Samsung Group has exited non-essential or low-growth units. At the end of last year, Samsung Electronics sold its fiber optics business and reduced its light-emitting diode (LED) business. Samsung Group also decided to sell its chemical and defense businesses to Hanwha Group.
The HDD motor drives the disk at a constant speed. The company started the business in 2007 and acquired Alphana Technology, a Japanese HDD motor maker, to expand it.
“The profitability of HDD, however, decreased rapidly as solid-state drives (SSD) have dominated HDD in laptops and desktops,” a Samsung Electromechanics spokesman said Sunday.
The company reported 7.14 trillion in sales, down 13 percent year-on-year. Meanwhile, its HDD division reported 370 billion won in sales, with a 170 billion won operating loss last year.
Through its restructuring efforts, the company said it would weigh more profitable options including multilayer ceramic chip capacitors (MLCC), camera modules and package substrates.
Some industry observers said the firm will also drop the electronic self-label (ESL) business, but the spokesman said nothing has been decided, although it has been under consideration.
Kim Ji-san, a tech analyst at Kiwoom Securities, said the company’s decision was a big step as it seeks a new growth engine.