TV operations slipped into the red last year, while factory utilization rates also fell sharply
Samsung seeks to protect margins through production efficiency, while LG turns to platforms
Samsung Electronics and LG Electronics are expected to remain under pressure in their TV businesses this year. <Newsis>
[Insight Korea = Nam Bit-haneul]
Samsung Electronics and LG Electronics are expected to continue struggling in their TV businesses this year as well. The two companies are facing what industry observers describe as a “triple burden”: weakening global demand amid the spread of personalization trends, aggressive catch-up by Chinese TV makers, and the fallout from the war in the Middle East.
According to industry sources on the 2nd, Samsung Electronics’ Visual Display (VD) and Digital Appliances (DA) divisions posted a combined operating loss of 600 billion won in the fourth quarter of last year. On a full-year basis, the two divisions also recorded a combined loss of 200 billion won.
LG Electronics is in a similar position. Its Media Entertainment Solution (MS) division, which oversees the TV business, remained in the red for three straight quarters from the second through the fourth quarter of last year. Its full-year operating loss reached 750.9 billion won.
Factory utilization rates at both companies’ TV operations also declined. Samsung Electronics’ TV and monitor utilization rate came in at 78.8% last year, down 1 percentage point from a year earlier. Over the same period, the utilization rate of LG Electronics’ MS division fell to 73.3%, down 3.9 percentage points year on year.
Much of the weakness at Samsung Electronics and LG Electronics stems from slowing TV demand both at home and abroad. According to market research firm Omdia, global TV shipments fell to 208 million units last year from around 250 million units in 2020. Another market research firm, TrendForce, forecasts that shipments will fall further this year to 196 million units, below last year’s level.
At the same time, Chinese manufacturers are rapidly closing the gap with low-price volume strategies. According to Counterpoint Research, Samsung Electronics ranked first in the global TV market last year with a 15% share based on shipments, but China’s TCL and Hisense were close behind at 13% and 12%, respectively. LG Electronics accounted for just 9% over the same period.
TCL in particular is raising the pressure further through an alliance with Japan’s Sony. Earlier in January, TCL and Sony agreed to spin off their home entertainment businesses, including TVs and audio, and establish a joint venture. The new company is targeting an official launch in April next year.
Compounding matters is the war in the Middle East. TVs are bulky products that typically rely heavily on sea freight, and concerns are growing that logistics costs could rise sharply if companies are forced to absorb the fallout from Iran’s blockade of the Strait of Hormuz.
Samsung Shuts Plants, LG Bets on Platforms to Defend Profitability
Samsung Electronics and LG Electronics are both weighing ways to navigate the crisis. Samsung has maintained an emergency management mode for its VD division since May last year. It has also moved to improve production efficiency. Most recently, Samsung decided to shut down its TV plant in Galanta, Slovakia, one of its key TV production bases in Europe, in May.
LG Electronics, meanwhile, is looking to boost profitability through its platform business. The platform model allows the company to sell TV operating systems to outside firms or install them on its own TVs to generate advertising and content revenue. LG operates its proprietary smart TV platform, webOS.
As part of that effort, LG added Google’s Gemini to “webOS26,” which will be installed in its 2026 TV lineup, alongside Microsoft’s existing Copilot. The company said the addition of multi-AI options that customers can choose from based on their preferences and needs further enhances its personalized AI search capabilities.
Seo Ji-yong, a professor at Sangmyung University’s business school, said, “Samsung Electronics and LG Electronics have reached a stage where their TV businesses must move beyond simple hardware competition and simultaneously shift their profit structures toward premium technologies, software, platforms and services, while redesigning efficient production and logistics networks.”
He added, “Amid low-priced Chinese competition and slowing global demand, a realistic strategy is not to rely on simple price competition, but to combine premium picture-quality technologies such as QLED and OLED with AI, software, content and services, shifting toward high-margin models centered on premium and offline channels, while diversifying production and logistics hubs as well as panel and component sourcing to better manage costs.”
-This article was translated by ChatGPT. (이 기사는 챗GPT가 번역했습니다.)
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