Dow Chemical is under pressure to deal with financial troubles in its Korean businesses after its strategic plans were put on hold due to issues with two major Korean clients.
Hanwha Chemical and Samsung Electronics are blamed for negative impacts on Dow’s bottom line, said officials, Sunday.
Dow’s bid to unload its less-profitable basic chemical division to Hanwha Chemical failed after Hanwha walked away from the discussions, last week.
Analysts say that the 5-trillion won acquisition price has weighed on Hanwha which has also been on the process of a merger with four Samsung Affiliates.
Dow planned to spend more to strengthen its high-yielding electro materials business with the money from the sale of its chemical division.
Another blow followed after Samsung Electronics dropped using Dow’s patented cadmium-free quantum dot materials in the manufacture of TVs.
The Samsung decision means that Dow will now collect lower royalties in Korea because LG Electronics also intended to renew licensing talks with the U.S.-based chemical giant.
close Since September last year, Dow has been on track to build its first plant to mass produce quantum dot materials in Cheonan, South Chungcheong Province.
Dow Chemical representatives in Korea weren’t available for comments.
On a related note, Dow in March announced that it will separate a portion of its century-old chlorine business and sell it to its rival Olin Corp in a $5 billion deal as part of efforts to shed low-margin assets.
Instead, it has recently appointed a young technician-turned businessman Kim Sea-il to head its electronic materials global business division.
“Many give positive sales figures for quantum dot material used int the LCD TV market,” said Jimmy Kim, an analyst at the IHS Technology group, in a note to clients.
“But, under the current high cost system, I don’t see output growing as fast as others do,” the analyst said.
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