Shifting Focus to Large TV Market
TV production of Samsung Electronics enjoying its position as the world's No. 1 global TV maker for the 12th year, dropped to less than 40 million units. Samsung’s annual TV production has fallen below 40 million units for the first time in eight years since 37.54 million units in 2009. Samsung’s TV production, which had once reached about 55 million units in 2014, fell by more than 15 million units in three years.
According to the electronics industry on April 3, the number of TVs produced by Samsung Electronics last year totaled 39.45 million units, a decrease of 16.8% from 47.42 million units produced in 2016. Last year, Samsung Electronics operated a TV production line with a total capacity of 44.63 million units in China, Mexico, Brazil, and Hungary. But its actual utilization rate stood at 88.4%, the lowest in the last three years.
Samsung Electronics explained that the drop in TV production was attributable to the fact that the company shifted its focus to the market of large TVs with 65-inch or bigger screens.
“Selling one big premium TV can be more profitable than selling several 30-to-40-inch TVs in a price war with Chinese companies,” a Samsung official said. "We are reorganizing our TV business with a focus on big TVs." In fact, Samsung Electronics reduced the proportion of 30-to-40-inch TVs from 65.3% in 2016 to 61% last year. Instead, the company dialed up the proportion of large TVs which are 50 inches or bigger from 28% to 34%.
However, it is a current challenge for Samsung Electronics to maintain its market dominance in terms of volume by rapidly growing the large TV market, which account for only 6% to 7% of the total TV market. This is because the superiority in quantity refers to taking the lead such as price negotiating power in the distribution market. According to market researcher IHS Markit, Samsung’s TV market share in terms of volume dropped 1.6% to 20% as of the end of last year from the previous year. On the other hand, LG Electronics’s market share rose to 12.6% from 12.2%. Samsung Electronics lowered its 55-inch QLED TV price to US$1,000 this year for the purpose of maintaining its 20% market share. Its intention is to increase the large TV market by lowering its entry barrier.