SEMES, a subsidiary of Samsung Electronics and the largest semiconductor display equipment maker in Korea, is restructuring.
The key is to sort out the liquid crystal display (LCD) equipment business. LCD equipment accounts for most of the sales of the SEMES display equipment business, but the decision can be interpreted as being based on the determination that it does not have a future. Samsung Display, the largest customer, plans not to invest in the LCD field. It is reported that SEMES is also considering the rearrangement of some of its less competitive post-processing equipment groups.
The industry estimates that CEO Kang Chang-jin, who recently moved from Samsung Electronics Semiconductor Division to SEMES as CEO, is making key moves to business efficiency.
According to the industry on the 18th, SEMES plans to formalize the restructuring of its LCD equipment business and make the formal decision next month at the earliest. Earlier, SEMES attempted to sell its LCD equipment business to another domestic equipment maker, K, which has been canceled due to a refusal by K. It is said that SEMES was unsure of whether to restructure or sell the business. Regardless of the final decision, some business partners close to SEMES will experience a significant change in business. Out of all the display equipment businesses, the OLED equipment business will be continued.
The restructuring of SEMES is in line with Samsung Display's investment strategy, which is the largest internal customer. Samsung Display has invested heavily in OLED production capacity expansion in recent years. Experts believe that there will be no future investment in large LCDs. Last year, SEMES looked for ways to diversify its customer base by exporting LCD equipment to Chinese panel makers, but it seemed that it was not enough to change the trend of downstream industries.
"As a subsidiary of Samsung Electronics, it is difficult to sell equipment to external panel makers other than Samsung Display. It would be strange to maintain the LCD equipment business, where per-capita profitability is much lower than that of semiconductor equipment,” said an equipment industry official.
It is estimated that the sales of SEMES did not exceed 2 trillion won last year. SEMES surpassed 2 trillion won in sales for the first time in 2017 thanks to the semiconductor boom. The industry expects the sales of SEMES last year to reach 1.8 trillion won to 1.9 trillion won. SEMES' sales of display equipment business grew for several years until 2017 but declined sharply last year. The cumulative sales for the third quarter of last year were 131.1 billion won, down about one-third of the same period last year (333.9 billion won). It is estimated that SEMES recorded sales of 100 billion won in the display equipment business last year. In 2017, annual sales amounted to 405.2 billion won.
"We have not reached confirmation yet," a SEMES official said. "We are reviewing the plan to overcome the business difficulties." It is also possible that, in the semiconductor equipment business, which is the mainstay of the company, SEMES will sort out some downstream equipment with low yields or low order volume. "We will continue to maintain equipment such as TSV-Bonder, but we are discussing several plans for some equipment that has lost its competitive edge," the official said.