Samsung is typically seen as one of the rivals that has forced Sony’s television business deep into the red. Today’s remarks that the company is considering spinning off its LCD business, therefore, are something of a surprise. Sony ended its involvement in a joint LCD production venture with Samsung earlier this year, but the Korean company’s television business is still seen as being in much better overall health than Sony’s. That estimate, however, is strictly a matter of degree — Samsung’s display division lost $891M in 2011, compared to Sony’s $2.2B.

“We are internally reviewing various options but nothing has been decided yet,” Samsung spokesman James Chung said. There are rumors that Samsung might integrate its OLED and LCD divisions rather than selling off its LCD business, but the glory days of LCD production are seen as over. The chart below neatly captures why; it shows operating profit margins on LCD panels from 2003 through Q2 2011.



The volatile surges and troughs in margins are explained by computer OEM adoption, consumer uptake, the advent of HDTV broadcasting, the economic downturn of 2008, and the amount of time it took to ramp new production facilities as demand swelled. This last decline has been driven by a weak economic recovery and consumer indifference towards 3D television.

The problem for display manufacturers is that their ability to ramp new products is distinctly limited. Sharp’s so-called “Quattron” technology, which uses an RGBY color scheme, is useless because television signals aren’t encoded in an RGBY format. Higher resolution displays above 1080p are more difficult to manufacture and aren’t supported by any formal standard. Up-sampling is a theoretical workaround, but upsampled content will never look as good as native — and you need a huge screen or a very close viewing distance before the difference between 720P and 1080P are apparent, nevermind the gap between 1080P and a hypothetical 1440/2180P screen.

The other problem Samsung faces is the rise of mainland Chinese production. What’s happening in Korea and Japan now is extremely similar to what happened in the US in the s and 90s, when Japanese manufacturers put a number of US television companies out of business. Analysts are making noise about OLED as the possible savior of Samsung’s display business. Don’t believe it. We’re not going to rehash the entire OLED situation at the moment, but rest assured, if Samsung knew how to make OLED displays as cost-effectively as LCD televisions, it would do so. A slow, long-term, half-decade ramp on OLED capabilities might make the technology workable on large screens, but it’s not going to deliver the kind of meteoric turn-around that woos investors and makes highborn ladies fan themselves.

Next page: “Thank God we aren’t at Elpida…”



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