What They Say
Samsung announced its Q2 2022 result and saw profits decline 23% but still came out at $7.65 billion and revenues were $54.15 billion. The company still expects record revenues for the year because of the strong first half. The strength in the U.S. dollar against the Korean won benefited the Company’s component businesses, resulting in an approximately $705 million won company-wide gain in operating profit compared to the previous quarter.
SDC (Samsung Display Corporation) saw record revenue for the mobile panel business as demand increased following the release of new flagship smartphones, including foldables, while the large panel business continued to post losses amid weak TV and monitor markets. SDC expects to maintain earnings growth in the mobile panel business, driven by strong demand for premium OLED panels for smartphones. The large panel business will expand the quantum-dot (QD)-OLED presence, increasing its customer base.
SDC posted $6.62 billion in consolidated revenue and $1.40 billion in operating profit for the third quarter.
Mobile display earnings improved both year-on-year and quarter-on-quarter thanks to growth in demand attributable to launches of new models by major smartphone brands.
For large displays, although sales of QD-OLED products continued to rise, initial investment costs of QD-OLED caused continued loss.
Looking ahead to the fourth quarter, Samsung expects market growth to be weaker-than-normal due to sluggish consumer spending, despite strong seasonal effects for the smartphone and IT markets. The Company will try to maintain its earnings quarter-on-quarter by using competitiveness in the high-end market and by capitalizing on favourable exchange rates, in spite of an otherwise unfriendly business environment.
In 2023, while macroeconomic challenges may persist, Samsung will focus on solid earnings through pre-emptive investments and development of differentiated technologies. It will also collaborate more closely with customers to increase its OLED market share, promoting the advantages of OLED in new application areas such as IT, Automotive and Gaming.
In particular, in the AR/VR market, which is projected to enjoy full-fledged growth starting 2023, Samsung will develop the technologies that customers need and complete SCM in order to solidify its leadership in the display industry.
SDC expects to invest $2.12 billion this year with $350 million in Q3.
The Visual Display Business expanded sales of premium products, but earnings declined due to weak demand and increased costs. The Digital Appliances Business, despite enhanced product mix, saw continued challenges due to higher materials and logistics costs amid sluggish demand. In the Visual Display Business, the Company will prioritize capturing demand in the premium segment and enhancing profitability through cost efficiency.
The Visual Display and Digital Appliances businesses posted $10.39 billion in consolidated revenue and $176 million in operating profit in Q3.
Overall market demand for TVs increased quarter-on-quarter in the third quarter led by improved seasonality, but contracted year-on-year, due to macroeconomic factors negatively affecting consumer demand. The VD Business posted a decline in earnings, as a result of weaker demand, higher costs and unfavorable currency effects in some regions. Nevertheless, Samsung said that it solidified its leadership in the premium segment.
In Q4, Samsung expects market demand to improve quarter-on-quarter due to year-end seasonality, but macroeconomic uncertainties are expected to persist. The firm plans to use sales opportunities such as Black Friday and global sporting events, focusing on its Neo QLED, Lifestyle and super-big TVs. It will also focus on securing profitability through optimized operations and efficient cost management.
Looking ahead to 2023, overall TV demand is expected to remain stagnant, while demand for premium products including super-big TVs will continue to grow.
What We Think
The comment about expanding the customer base for QD-OLED is interesting and, given the weak sales by Samsung Electronics, unsurprising. We have recently seen a new monitor from Philips. (Philips unveils its first QD-OLED and 42″ OLED monitors) However, I would think there is likely to be another TV customer. (BR)