Saturday, December 7, 2019
Samsung Materials Affiliates Hold Investment Due to Slow Business
Samsung Materials Business
Samsung Materials Affiliates Hold Investment Due to Slow Business
  • By matthew
  • February 21, 2014, 10:03
Share articles

Cheil Industries headquarters building.
Cheil Industries headquarters building.


It has been about four months since the electronic material research center of the Samsung Group was opened in Suwon City, Gyeonggi Province. However, its subsidiaries’ move-in is continuing to be delayed. Besides, the recent poor performances of Cheil Industries, Samsung SDI, and Samsung Fine Chemicals and their investment postponement announcements are adding difficulties to the Samsung Group’s plan for the promotion of its material business segment.

At present, Cheil Industries has yet to complete its relocation, and Samsung Fine Chemicals is planning to be housed there from next month, according to its plan to move the headquarters to Suwon. Only Samsung SDI has finished the relocation so far.

Under the circumstances, some industry insiders point out that the Samsung Group has failed to draw up a big picture for the restructuring of its materials business arms. “The overhaul is likely to be led by Samsung Electronics, but no specific plan has been suggested yet,” said one of them, adding, “It seems that Samsung is suffering from the lack of a control tower.”

The trouble has been compounded by the subsidiaries’ less-than-expected earnings for the fourth quarter of last year. Not a few investment plans have been put on hold, signaling some change in their long-term business strategies. Cheil Industries and Samsung SDI recorded losses in that quarter while Samsung Fine Chemicals’ annual operating profits fell below zero. The first has decided to reexamine its 1.8 trillion won (US$1.68 billion) investment plan for the next three years. The third is going to pace itself as well in manufacturing polysilicon and positive electrode active materials for secondary batteries.

Things were quite different earlier last year. At that time, Cheil Industries took over Novaled, which owns OLED patents, and sold its fashion business unit to Samsung Everland to speed up the reorganization. However, the pace has been significantly slowed, due mainly to the poor performance of Samsung Electronics, one of its major clients.

The group has not come up with any countermeasures, either. This means that the future of the subsidiaries of Samsung is not entirely rosy in the short term.

Samsung Fine Chemicals is moving ahead with its polysilicon and active material businesses, through collaboration with SunEdison (formerly MEMC) of the US and TODA of Japan. Samsung SDI, in the meantime, is producing products based on its PDP patent contracts with Seiko, Asahi, Sony, etc. Although they have hundreds of patents and their own R&D teams and projects, these are easily eclipsed by its rivals like LG Chem.

This is why some employees of the companies are claiming that the chemical business unit, rather than electronics, lead the development of the materials business in view of its own characteristics, that is, at least five to 10 years is taken for at least some tangible results. Then, it is Cheil Industries that is to assume the central role. Still, it remains to be seen whether or not Cheil Industries is capable enough when its business showings and relations with the National Pension Service, the largest shareholder, are taken into consideration.