Samsung Electronics Scales Back LED Lighting Business

Samsung Electronics Co Ltd 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 four years ago.

LED, rechargeable cells for hybrid electric cars, solar cells, medical devices and biopharmaceuticals were five areas singled out by the Samsung Group in 2010 as new growth drivers for the conglomerate.

At the time, the group forecast the businesses would generate 50 trillion won ($47.5 billion) in annual revenues by 2020 for its affiliates including Samsung Electronics.

But Samsung Electronics has struggled to gain traction in the LED lighting market, failing to loosen the grip of established rivals such as Philips and Osram in advanced markets while facing mounting margin pressures from Chinese competitors in emerging markets.

"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 Group affiliates have seen limited returns so far from the five new growth areas.

While Samsung SDI Co Ltd is supplying German premium automaker BMW with electric vehicle battery cells, Samsung companies have struggled to generate significant revenues form other businesses such as solar cells.

Analysts and investors have said developing or identifying new growth drivers will be a key test for Jay Y. Lee, heir-apparent of Samsung Group, as his father, group patriarch Lee Kun-hee, remains hospitalised following a May heart attack.

A Samsung Electronics spokeswoman said the revenue contribution of LED lighting to the company had been small. She declined to give specific figures.

© Thomson Reuters 2014