To seize the European market, Samsung Display (SDC) established a production site in Slovakia. However, as its main client, Samsung Electronics, progresses towards internalized production and the increase of local personnel costs, SDC reportedly plans on clearing out its branch in Slovakia.
According to South Korean-based media, Newsis, the announcement made by the Financial Supervisory Service (FSS) online showed that SDC had already cleared out its branch in Slovakia in the second season of 2024. Samsung's LCD business unit established an LCD module factory in Slovakia in 2008, which was in charge of providing assembled LCD modules produced in South Korea such as LCD cells, BLU, and optical thin films to companies including Samsung.
Originally, SDC saw the factory in Slovakia as an important production site due to low labor costs and its proximity to neighboring European countries. However, due to their biggest client, Samsung, internalizing LCD module production in Slovakia, and Sony clearing out from the area as well, production volume greatly dropped.
In addition, due to mass production by Chinese display businesses, LCD prices have plummeted, causing the profitability of the branch in Slovakia to plummet. SDC experienced a net loss of KRW200 million (approx. US$147 thousand) for 2024 with total assets at KRW29.7 billion (approx. US$22 million), a significant step down compared to its performance in 2022.
As local labor laws were being adjusted, personnel costs began to rise, and its initial advantage in production ceased to exist. The government in Slovakia continue to raise basic wages by 7-8% each year, with it being EUR646 (approx. US$710), EUR700 (approx. US$776), and EUR750 (approx. US$831) respectively from 2022 to 2024.
People in the industry pointed out that SDC had considered clearing out from Slovakia back in 2011 and 2015, but delayed the process due to its investment agreement with the local government. With one out of two production lines getting shut down in 2018 and SDC's decision to end its LCD business in June of 2022, its branch in Slovakia had long stopped production, and it is only a matter of time before it gets officially cleared out.
