"Samsung Display separated the company's OLED business division and more of Samsung Display's workforce joined the OLED business unit. The latest decision was part of the ongoing Samsung Group-initiated efforts to restructure unprofitable businesses," said an official who is familiar with the issue, Monday.
Because Samsung Display also operates a traditional liquid crystal display (LCD) business, its decision to separate the OLED business is expected to put the LCD business in further danger, said the official.
"Now, Samsung is initiating an exit strategy for LCDs, which are no longer promising and have become unprofitable," the official said.
A Samsung Display spokesman said the company is trying to find measures to offset the effects of weak demand for conventional LCD displays, which became less profitable due to the rapid rise of low-cost Chinese competitors.
He declined to comment whether or not the company will make an official announcement on the latest business shake-up.
Samsung is accelerating its efforts to move away from LCDs to the more expensive OLEDs for small- and medium-sized digital devices.
The group's display unit is shutting down some of its LCD lines and was in discussions with unidentified Chinese firms to sell others such as the L7 in the local city of Cheonan.
Another official said Samsung Electronics may acquire the LCD business from Samsung Display to keep Samsung's TV business running. Unlike LG Electronics, Samsung is still keen on promoting TVs using its LCD-related infrastructure.
"Samsung Electronics has no imminent plans to invest more in OLED TVs as TVs based on LCD technology such as quantum dot displays are customized to keep Samsung plants operating given the manufacturing infrastructure," said a fund manager from a U.S.-based investment bank in Seoul.
"The OLED trend is for real. OLED will be accounting for a third of all smartphone displays by 2018," Nomura Securities said in a report to clients.
"Japanese companies have fallen behind the Korean majors in both technological development and mass production experience," said the securities firm.
Samsung Electronics owns an 84.8 percent stake of Samsung Display, followed by Samsung SDI with 15.2 percent. The group's display unit is currently led by Samsung Electronics senior Vice Chairman Kwon Oh-hyun.
Samsung Display recently won a deal with Apple to supply its OLED displays for use in new iPhones, which will be introduced in late 2017. LG Display will supply OLEDs for the second batch of Apple devices.
Samsung Display reported a 270 billion won operating loss during the first quarter of this year due to the struggling LCD business, according to the company.