The board of directors of Samsung Electronics has decided to spin off the company's LCD (liquid crystal display) panel manufacturing unit.
The new company, provisionally named Samsung Display Co. will be launched on April 1, and will have an investment of 750 billion won (US$665 million) in capital, the company said.
Samsung's decision comes as it and its competitors are struggling with slow demand and falling profits in its LCD business.
The new structure will give the LCD panel business the ability to take business decisions quickly and respond to clients' needs more swiftly, Samsung said in a statement.
The move will still require approval from the company's shareholders in March.
After five straight months of steep declines, prices for large-size LCD panels stabilised in December, 2011 because of better sales than expected and decreased production, according to research firm IHS iSuppli.
The firming in panel prices in December can be attributed to lean inventories throughout the supply chain and to lower factory utilization rates, after suppliers were forced to cut production in order to control supply and stem financial losses, it said.