Samsung Display Liquidates Slovak Subsidiary, Ending 16 Years of European Operations
Samsung Display has officially liquidated its Slovak subsidiary in the second quarter of this year, marking the end of its European business in 2016. The subsidiary was established in 2007 and initially built due to Slovakia's low labor costs and being a gateway to Europe, making Slovakia its production base.
Samsung Display's Slovak subsidiary imports liquid crystal display (LCD) components produced in South Korea and assembles them with backlight units and optical films to produce LCD modules. These modules were subsequently supplied to Samsung Electronics and other local companies. However, over the years, the role of this subsidiary has significantly weakened, especially after Samsung Display withdrew from its LCD business two years ago.
Samsung Display had previously considered withdrawing from its Slovak subsidiary in 2011 and 2015, but postponed the decision due to investment agreements with the local government. In 2018, Samsung Display decided to shut down one of its two production lines in Slovakia, marking its exit from the country. The subsidiary completely ceased production several years before Samsung Display officially withdrew from its LCD business in June 2022.
Samsung Display's decision to liquidate the subsidiary was influenced by multiple factors. Samsung Electronics, the largest customer of its subsidiary in Slovakia, has achieved internalization of LCD module production locally in Slovakia, greatly reducing the output of Samsung Display's subsidiary; In addition, Sony's withdrawal from the region further affected production levels; The aggressive pricing strategy of Chinese display companies has lowered the price of LCDs and reduced profitability; Slovakia has also strengthened local labor regulations, leading to wage increases and decreased production efficiency, further reducing the value of Samsung Display's subsidiary as a production base.
The Slovak government has been implementing a strong minimum wage growth of 7% -8% annually. The minimum wage trend in Slovakia over the past three years is as follows: 646 euros per month in 2022, 700 euros per month in 2023, and 750 euros per month in 2024. These increases have led to an increase in labor costs, affecting the operation of the subsidiary.
Samsung Display's Slovak subsidiary incurred a net loss of 200 million Korean won (approximately 148000 US dollars) last year, which turned into a loss compared to the previous year. As of the end of 2023, the asset size of the subsidiary is 29.7 billion Korean won. According to the electronic disclosure system of the Financial Supervisory Authority on August 16th, "Samsung Display fully liquidated its Slovak subsidiary in the second quarter
The liquidation of Samsung Display's Slovak subsidiary reflects a broader trend in the display industry. The market has significantly shifted towards new technologies such as OLED (Organic Light Emitting Diodes) and QLED (Quantum Dot LEDs), leading to a decrease in demand for LCDs. Samsung Display's decision to exit the LCD business and the subsequent liquidation of its Slovak subsidiary highlights the impact of these technological shifts and competitive pressure from Chinese manufacturers.
Samsung Display had previously considered withdrawing from its Slovak subsidiary in 2011 and 2015, but postponed the decision due to investment agreements with the local government. In 2018, Samsung Display decided to shut down one of its two production lines in Slovakia, marking its exit from the country. The subsidiary completely ceased production several years before Samsung Display officially withdrew from its LCD business in June 2022.
Samsung Display's decision to liquidate the subsidiary was influenced by multiple factors. Samsung Electronics, the largest customer of its subsidiary in Slovakia, has achieved internalization of LCD module production locally in Slovakia, greatly reducing the output of Samsung Display's subsidiary; In addition, Sony's withdrawal from the region further affected production levels; The aggressive pricing strategy of Chinese display companies has lowered the price of LCDs and reduced profitability; Slovakia has also strengthened local labor regulations, leading to wage increases and decreased production efficiency, further reducing the value of Samsung Display's subsidiary as a production base.
The Slovak government has been implementing a strong minimum wage growth of 7% -8% annually. The minimum wage trend in Slovakia over the past three years is as follows: 646 euros per month in 2022, 700 euros per month in 2023, and 750 euros per month in 2024. These increases have led to an increase in labor costs, affecting the operation of the subsidiary.
Samsung Display's Slovak subsidiary incurred a net loss of 200 million Korean won (approximately 148000 US dollars) last year, which turned into a loss compared to the previous year. As of the end of 2023, the asset size of the subsidiary is 29.7 billion Korean won. According to the electronic disclosure system of the Financial Supervisory Authority on August 16th, "Samsung Display fully liquidated its Slovak subsidiary in the second quarter
The liquidation of Samsung Display's Slovak subsidiary reflects a broader trend in the display industry. The market has significantly shifted towards new technologies such as OLED (Organic Light Emitting Diodes) and QLED (Quantum Dot LEDs), leading to a decrease in demand for LCDs. Samsung Display's decision to exit the LCD business and the subsequent liquidation of its Slovak subsidiary highlights the impact of these technological shifts and competitive pressure from Chinese manufacturers.