Maybe Less OLED More MiniLED TVs

What Display Daily thinks: The TV business is still the glamour-puss of the display industry. But it is a fickle mistress and one that is being driven more by technology positioning than consumer need.

All the data points to OLED TVs suffering from a slump in demand, and they are much higher priced than comparative LCD TVs.

In the meantime, LG Electronics is talking more about the pursuit of automotive opportunities, and also protecting itself from Chinese home appliances companies. I wonder how much better LG Electronics’ TV business would have been if it was not constrained by the need to deliver on Korea’s ambitions to lead with OLED?

MiniLED TVs are fine. They are more than fine in terms of suitability for the average living room, performance, and most importantly, value. Maybe, if LG Electronics was actually in the TV business and not joined at the hip to its display business it could make decisions about success in the TV business because unhindered as they are by policy, Hisense and TCL seem to be doing pretty well leapfrogging into positions that used to be held by Samsung and LG.

Apple would gladly bankrupt its suppliers to get what it wants for its products. I wonder how far LG Electronics would go with its display suppliers to get what it needs? There’s a point of disruption that is badly needed here, one that separates the ambitions of the seller of the end product from the seller of the components that go into that end product. It’s a failure point in the display industry’s supply chain, mostly because of the TV business.

If LG Electronics is so into its software services around its TV businesses and the proliferation of webOS, it makes even more sense to completely disconnect itself from the panel business, whatever that needs to mean to the ambitions of the conglomerate. LG Electronics needs to be more nimble.

LG Electronics Has a Mixed Third Quarter

Well, it may be better than a mixed quarter when it taken as a whole but when it comes to the stuff we are interested in, the display stuff, it is a mixed bag. On a YoY basis, LG Electronics is doing considerably better, but on a QoQ basis, it looks like a case of two steps forward, one step back with another step back on the horizon in Q4’23.

LG Electronics (KRW billions)Q2’23QoQQ3’23YoYQ3’22
Consolidated (incl. LG Innotek)Sales19,998.4+3.6%20,709.4-2.2%21,176.8
OP741.9+254.8996.7+250.1746.6
(%)3.7%+1.1%4.8%+1.3%3.5%
Home Appliance & Air SolutionSales7,985.5-6.6%7,457.4-0.2%7,472.9
OP600.1-95.6504.5+274.7229.8
(%)7.5%-0.7%6.8%+3.7%3.1%
Home EntertainmentSales3,146.7+13.4%3,568.6-3.9%3,712.1
OP123.6-12.9110.7+166.1-55.4
(%)3.9%-0.8%3.1%+4.6%-1.5%
Vehicle component SolutionsSales2,664.5-6.0%2,503.5+6.7%2,345.4
OP-61.2+196.1134.9+38.896.1
(%)-2.3%+7.7%5.4%+1.3%4.1%
Business SolutionsSales1,332.7-0.1%1,330.9-6.9%1,429.2
OP2.6-23.1-20.5-6.1-14.4
(%)0.2%-1.7%-1.5%-0.5%-1.0%
LG Electronics’ financial performance for Q3’23. OP is operating profit. (Source: LG Electronics)

Revenue grew on strong appliance and vehicle component sales. Profitability increased due to lower material costs, improved efficiency in appliances and TVs, and operating leverage in vehicle components.

Source: LG Electronics

In its investor call, LG mentioned geopolitical risks specifically in Europe and the impact on demand. The biggest pain is being felt in the downturn of IT product sales as company’s cut back during nervy times. Vehicle components had revenue growth from electric vehicle components. Record profits came from the EV business and cost structure improvements.

Source: LG Electronics

On OLED TVs, LG expects the growth rate to reach mid-teens by 2024, using data from market research firm Omdia to emphasize the transition from LCD to OLED is accelerating. For IT products, the delay in demand recovery was attributed to high inflation and geopolitical instability globally, again. LG said it is monitoring demand signals from enterprises specifically where there has been a lot of pullback on spending.

The Global TV Market is Changing

The global TV market is facing headwinds in 2023 due to economic challenges lowering consumer confidence and demand. Total shipments are expected to decline to 215 million units, a 2.5% drop from 2022, according to Sigmaintell.

Samsung is diversifying with MicroLED, OLED, and MiniLED models while boosting share of cheaper 4K QLED sets. LG is doubling down on OLED despite profit struggles and shifting focus to software. Sony is dropping OLED development and moving high-end to MiniLED.

Brands are optimizing portfolios and cost structures to balance profitability and share goals. Hisense is leveraging multiple brands and technologies to target various segments. TCL is focused on MiniLED and large screen sizes.

The market is expected to start recovering in 2024 as inflation eases and economic growth resumes. Shipments should rise 1.1% to 217 million units. Demand for premium large and high-end TVs is projected to rebound, especially OLED and MiniLED models. But, the questions remains, if MiniLEDs are competitive at lower price points, will consumers rebound in such a big way as to swing OLED TV sales and profits?