Samsung SDI joins Korean firms selling unprofitable film business

Samsung SDI's polarizer film factory in Cheongju, North Chungcheong Province / Courtesy of Samsung SDI

Samsung SDI has decided to follow in the footsteps of LG Chem and other Korean chemical companies by selling its struggling industrial film business amid fierce competition with Chinese rivals.

The electronic materials and battery manufacturing unit of Samsung Group said Tuesday that it will sell its polarizer film business to China’s Wuxi Hengxin Optoelectronic Materials for 1.12 trillion won ($833 million).

Under the contract signed that day, Samsung SDI will hand over its operations for polarizer film production and sales in Cheongju, North Chungcheong Province, and Suwon, Gyeonggi Province, once the antitrust authorities approve the deal.

The Korean firm will also transfer the entire stake in its Wuxi subsidiary in China to the buyer.

“Our board of directors agreed to sell the polarizer film business to enhance the competitiveness of our electronic materials division,” Samsung SDI said in its regulatory filing.

“Our electronic materials division will focus on materials for semiconductors, organic light-emitting diodes (OLEDs) and batteries to enhance competitiveness and maximize synergy with the battery business through continuous investment.”

Since their Chinese competitors started supplying low-priced industrial films used for LCDs and other IT products, Korean industrial film producers have faced worsening profitability.

Decelerating demand for IT products has also sparked Korean firms to stop producing industrial films.

Last year, LG Chem sold its polarizer divisions to two Chinese companies for 1.1 trillion won.

Following the deal, the company redeployed its employees and carried out a voluntary redundancy program.

SKC also sold its polyester (PET) film division to Hahn & Company for 1.6 trillion won in 2022, despite the fact that the chemical firm started its business in the 1970s with the production of PET films.

After the acquisition, the private equity firm changed the names of the companies spun off from SKC to SK Microworks and SK Microworks Solutions.

Last month, Kolon Industries spun off its money-losing PET film business to set up a joint venture between its spun-off company and SK Microworks.

Kolon Industries holds an 18 percent stake in the joint venture, while SK Microworks owns the remaining 82 percent.