Samsung Display sells CSOT stake to Samsung Electronics at 50% return after 5 years

Samsung Display has agreed to sell its entire stake in China's TCL CSOT (China Star Optoelectronics Technology) to Samsung Electronics for 1.27 trillion won ($952 million).

The shares were received as payment when Samsung Display sold its Suzhou factory to CSOT in 2020 as part of a wind-down of its Chinese liquid crystal display business. Samsung Electronics will now acquire those shares, generating a roughly 50 percent return on the original cost.

Samsung Display disclosed Friday that it would transfer a 10.16 percent stake in CSOT to Samsung Electronics for 1.27 trillion won. The transaction is expected to close in December.

Samsung Display signed a deal in 2020 to sell its 100 percent stake in Samsung Suzhou Module and a 60 percent stake in Samsung Suzhou LCD to CSOT. The sale was completed in April 2021, with CSOT shares received as consideration. The original acquisition cost of those shares was 848.9 billion won.

At the time, Samsung Display was expanding its dominance in the smartphone display market through small- and medium-sized OLED panels, and the need to exit the LCD business — where it faced intensifying low-price competition from Chinese rivals — had grown increasingly pressing.

That backdrop explains why Samsung Display moved to sell its remaining CSOT stake entirely to Samsung Electronics.

"As our business ties with CSOT have weakened following the exit from the LCD business, we decided to sell the stake we held to Samsung Electronics," a company official said.

Samsung Electronics, by contrast, still manufactures televisions using LCD panels and needs to maintain cooperation with Chinese LCD makers. In its own disclosure on the share acquisition, the company cited "strengthening strategic collaboration" as the purpose of the purchase.

Samsung Electronics is currently engaged in litigation in the United States with TCL, CSOT's parent company, over mini-LED televisions, yet panel-level cooperation appears to be continuing. From CSOT's perspective, Samsung Electronics — which has held the No. 1 position in the global TV market for 20 consecutive years — is a customer it cannot afford to lose.

CSOT also appeared in Samsung Electronics' semiannual report disclosed in August as one of the key suppliers for its DX division. The company said it sources display panels from CSOT and SDP (Sakai Display Products).

The stake sale is also expected to give Samsung Display a significant injection of capital for future investments. Samsung Electronics disclosed Thursday that Samsung Display would spend 3.9 trillion won this year on supplementary investment in existing production lines.

Samsung Display also has a 67 trillion won investment in the Asan Phase 2 complex on the horizon. The company recently issued orders for structural construction work on a new factory, designated A7, within the complex, with ground-breaking planned for early next year and completion targeted for 2028.