Samsung scales down LED lighting as outlook dims

Mon Oct 27, 2014 8:05am EDT
 
Email This Article |
Share This Article
  • Facebook
  • LinkedIn
  • Twitter
| Print This Article | Single Page
[-] Text [+]

By Se Young Lee

SEOUL (Reuters) - Samsung Electronics Co Ltd (005930.KS: Quote) said on Monday that it will cease its light emitting diode (LED) lighting business outside of South Korea, scaling back what was identified as a key growth business just four years ago.

The pullback comes on the heels of Dutch rival Philips' (PHG.AS: Quote) recent decision to spin off its century-old lighting business. Price wars have slashed profitability to levels deemed too unattractive in the long run, despite an LED boom that has upended the global incandescent lighting industry.

Analysts say Samsung Electronics' retreat reflects the growing competition from Chinese manufacturers even as demand for LED lighting remains strong. LED lamps last 10 times longer than fluorescent bulbs and 100 times longer than traditional incandescent tungsten filament bulbs.

"It appears that Samsung decided to fold the business because price competition was so fierce and there was not a lot of room for growth going forward," said Seoul-based IM Investment analyst Lee Min-hee.

Philips said in September that it will spin off its lighting business to expand its higher-margin healthcare and consumer divisions. Two month earlier, Germany's Osram Licht AG (OSRn.DE: Quote), which also makes LED lights, announced a cost-cutting plan that included nearly 8,000 job cuts.

A spokeswoman at Samsung Electronics said revenue contribution from the business was small but did not comment on specifics, including how much Samsung had invested.

"We will remain active in the LED industry through our LED component business," Samsung Electronics said in an emailed statement, adding that it will focus on areas such as backlighting for displays of consumer products like televisions.

Samsung's decision also underscores the challenges faced by the company and the wider Samsung Group in nurturing new growth drivers. Samsung Electronics is battling falling profits in its smartphone business, the world's largest, and group patriarch Lee Kun-hee has been hospitalized since a May heart attack.   Continued...

 
A woman takes a picture outside the Samsung stand at the Mobile World Congress in Barcelona February 24, 2014.   REUTERS/Albert Gea