Samsung buys its $892 million stake in China's top display maker from its display subsidiary

Samsung Display has held an $892 million stake in CSOT, one of China's leading display manufacturers, since 2020.

That stake has now been bought by Samsung Electronics, the most valuable entity within the Samsung conglomerate.

CSOT is a subsidiary of leading Chinese TV manufacturer TCL. It's rather interesting how Samsung Display came to acquire its stake in CSOT.

In 2020, Samsung Display sold its LCD manufacturing plant located in Suzhou, China, to CSOT. It acquired a 10.16% stake in the company as part of that deal. Samsung Electronics announced in a regulatory filing this week that it's now acquiring Samsung Display's full 10.16% stake in CSOT for roughly $892 million.

The price it's paying is about 50% higher than what Samsung Display acquired it for in 2020, so the conglomerate's display subsidiary has walked away with a tidy profit.

Samsung Electronics has clarified why it's making this acquisition. It feels that this will help the company strengthen its strategic partnership with CSOT, as it sources LCD panels from the company. With an equity stake in hand, Samsung Electronics should have a stronger position in panel supply negotiations with CSOT.

Since Samsung no longer makes LCD panels itself, it needs to rely on other manufacturers like CSOT to fulfill its requirements, which is why we're seeing a transfer of this ownership position within the conglomerate rather than an outright sale.