Samsung subsidiary Semes reportedly selling LCD and OLED business, in negotiations with KC Tech

South Korea's largest semiconductor and display equipment manufacturer Semes is actually also the equipment subsidiary of Samsung Electronics. After Semes' new CEO Kang Chang-jin took office, he began reorganizing the underperforming panel equipment business, but struggled to find a willing buyer. Although Semes had previously approached FNS Tech, the business sale ultimately did not materialize, and it is currently reported to be in negotiations with KC Tech.

Korean media Theelec cited industry sources that South Korean equipment manufacturer KC Tech received a proposal from Semes in early May for the sale of its panel equipment business, and is currently conducting internal discussions, with an answer expected around August. Semes' current business sale proposal includes not only the previously reported LCD equipment division but also the OLED equipment division.

Related parties indicated that KC Tech considers Semes' proposal worthy of consideration, as it would help develop more stable new customers. In fact, several years ago, Semes and KC Tech had already negotiated regarding the acquisition of the panel equipment business.

Samsung Display's production lines have long relied on Semes for cleaning and coating equipment. In contrast, KC Tech has a closer trading relationship with LG Display (LGD). If KC Tech acquires Semes' panel equipment business, it could potentially forge further business with Samsung Display in the future. KC Tech's new CEO Im Kwan-taek (phonetic transliteration), appointed in March 2019, previously served as vice president at Samsung Display.

Semes, Samsung Electronics' equipment subsidiary, saw its annual revenue exceed 2 trillion KRW (approximately USD 1.7 billion) in 2017, driven by significant growth in semiconductor equipment revenue—double that of 2016's 1 trillion KRW. Panel equipment accounted for 28% of total revenue in 2016, but fell to 20% in 2017 and further dropped to 9.8% in 2018.

Over the past three years, Semes has accelerated the restructuring of its panel equipment business due to the rapid decline in panel equipment revenue, but has struggled to find a willing buyer. Although it previously negotiated a sale with Korean equipment maker FNS Tech, the deal ultimately fell through.

In fact, Semes' panel equipment business revenue is closely tied to Samsung Display's investments. Recently, due to the halt of Samsung Display's large-scale investments, the panel business revenue share of Semes' total revenue in Q1 2019 fell further to 7.1%.

The current equipment business sale negotiations between KC Tech and Semes reportedly do not include the inkjet printing equipment business. Industry observers speculate that Semes' inkjet printing equipment is related to Samsung Display's investment in large-size QD-OLED panel production lines for TVs. If this sale does not include the inkjet printing equipment business, the transaction amount is unlikely to be very high.

(Source: Digitimes)