Shrinking Sales
Last year, TV sales volumes in China and Japan decreased by 2.4 million and 3.21 million units compared to 2013, respectively. Meanwhile, the number increased by 4.67 million in Korea. In addition, Korean TV manufacturers increased their sales by US$1.5604 billion between 2013 and 2014. Under the circumstances, Korean companies’ global market share went up from 36.2 percent to 37.1 percent.
Nevertheless, their operating profits are plummeting. The TV divisions of both Samsung Electronics and LG Electronics are predicted to have recorded large losses in the first quarter of this year.
Specifically, the operating losses of the Consumer Electronics (CE) division of Samsung Electronics for the quarter are estimated at more than 80 billion won (US$73.5 million). If this is the case, the CE division will be in the red for the first time since the last quarter of 2010. The TV manufacturing unit of LG Electronics is expected to have recorded losses in Q1 of this year, too. Its operating profits dropped from 134.2 billion won (US$123.3 million) to 1.7 billion won (US$1.56 million) between the third and fourth quarters of 2014.
This can be attributed, above all, to foreign exchange rate fluctuations. The Russian ruble plummeted in Q4 2014, and Japanese TV manufacturers such as Sony are making up for their losses by means of the weak yen. The emergence of Chinese companies in the mid-end market is another threat. Haier, Hisense, and TCL have already overtaken LG and Samsung Electronics in the Chinese market.
According to market research firm DisplaySearch, global TV demand is forecast to increase 4.3 percent from a year earlier this year, but the percentage is likely to fall to 2.09 percent in 2016 and 1.23 percent in 2017. With the situation as it is, industry experts are stressing the necessity of high-end products. Well aware of it, Samsung and LG are trying to win over more consumers with their curved and OLED TV products.