Semes struggling to sell off display equipment unit

South Korean semiconductor and display equipment maker Semes is having a tough time trying to sell off its underperforming display equipment business, industry sources said on July 8.

The Samsung Electronics’ affiliate has been seeking to unload the underperforming unit to companies like FNS Tech and KCTech. The sources confirmed Semes issued a proposal to KCTech in May.

“This would not be the first time for KCTech to talk with Semes, and if the deal happens, it would be a chance for KCTech to diversify its equipment and secure new clients,” said one industry watcher on the condition of anonymity.

Semes and KCTech had discussed such a transaction a few years earlier, he added.

More recently, Semes approached FNS Tech, where many of its employees are at executive levels. The deal, however, never happened.

Semes has been nearly exclusively supplying all the washing and coating equipment used at Samsung Display’s production lines. For KCTech, which supplies mainly to LG Display, taking over Semes’ display equipment unit would give it a chance to work with Samsung. Coincidentally, the current KCTech CEO Lim Gwan-tek who was appointed in March this year was previously a vice president at Samsung Display.

In 2017, Semes posted more than 3 trillion won of revenues ($2.5 billion), up from the 1.8 trillion won in 2016, with the semiconductor equipment business leading the sales. But in 2017, it accounted for just 20%, further falling to less than 10% in 2018. In the first quarter of this year, with Samsung Display refraining from making new production investments, the ratio fell to 7.1%.

Some say the takeover proposal probably left out the OLED ink jet printing equipment, which could be used for the QD color filter production at Samsung Display’s facilities for large OLED panel lines for televisions. This means a smaller price tag.

“Samsung Display is currently testing with US Kateeva’s equipment, but we believe ultimately, Semes will be chosen,” said another market watcher.

The Elec is South Korea’s No.1 tech news platform.