With prices of liquid crystal display (LCD) panels that have surged since last year finally showing signs of plateauing out, global TV makers such as Samsung Electronics Co. and LG Electronics Inc. are expected to see profits in their home appliance divisions improve in the following quarters.
According to the global industry and economic data provider IHS Markit on Thursday, the average unit price of 65-inch ultra-high definition (UHD) LCD panels that hit an all-time high of $420 in March has remained nearly unchanged, and it is expected to fall to $417 in June. The price of popular 40-inch LCD panels has been steady since December, while 55-inch panels have seen their average price remain almost flat since February.
The LCD panel prices that have rapidly grown since the first half of last year serving as a boon to display makers but bane to TV producers are finally expected to move downward starting June, according to market experts.
According to a market researcher TrendForce, the recent slowdown in panel prices is partly attributed to the high panel inventory stocking by Chinese TV makers. LCD panel output has also increased, putting the brakes on the rises in LCD panel prices. In particular, to meet the surge in demand for big screen TVs larger than 60 inches, display makers have ramped up large-sized LCD panel production since last year.
The recent slowdown in panel price growth is expected to benefit TV set makers, including Korea’s two TV giants Samsung Electronics and LG Electronics that are also the world’s leading TV producers. Samsung Electronics’ consumer electronics (CE) division that makes TV sets reported a 24 percent on-year fall in operating profit to 380 billion won ($336 million) in the first quarter ended March despite its 2.7 percent increase in sales to 10.34 trillion won. “The surging LCD panel price coupled with Sharp’s abrupt decision to stop supplying its panels dented our profitability,” said an official from the company. “The profitability is expected to improve thanks to the stabilizing panel price.”
LG Electronics’ home entertainment (HE) division recorded its highest operating profit margin of 8.8 percent in the quarter, but it would have posted a double-digit profit margin if the panel price had not surged, said an official from the company. “The price stability is good news as the cost in TV making greatly depends on the panel price,” he added.
By Kim Dong-eun
[ⓒ Pulse by Maeil Business Newspaper & mk.co.kr, All rights reserved]