Seoul: Samsung Electro-Mechanics Co., an electronic components maker affiliated with Samsung Electronics, has said it will shut down one of its Chinese units that produces high density interconnect (HDI) substrates due to low profitability.
Kunshan Samsung Electro-Mechanics Co. in Jiangsu, China, will halt production and sales, Samsung Electro-Mechanics said, adding that it also plans to sell assets of the Chinese unit.
Kunshan Samsung Electro-Mechanics produces HDI, a type of printed circuit board used in electronic devices, including smartphones and laptops, Yonhap news agency has reported.
The company has reportedly been struggling to make a profit in recent years due to fierce competition from low-cost Chinese and Taiwanese rivals.
To help the Chinese unit wind up its business, Samsung Electro-Mechanics will purchase 383.6 billion won worth of new shares issued by Kunshan Samsung Electro-Mechanics so the company can pay off its debts.
Samsung Electro-Mechanics has been expected to pull away from the HDI business due low profitability. The company previously announced its HDI production line in Busan will be transferred to Vietnam.