Why Samsung is lagging behind SONY LG in the high-end TV market? The shutdown of OLED TV seems to be a mistake

2018-07-09

TechWeb (May 3rd), the Reuters reported that Samsung’s decision to stop producing OLED television in 2015 might be a mistake, because it gave the high-end TV market to rival SONY and LG.

In 2013, the dazzling OLED TV made its debut at the consumer electronics show in Las Vegas. Later this year, Samsung advertised the 55 inch TV at $10 thousand (63622 yuan) in the TV market.

Among the promotions, one of them was a attic party in the Hyde Park community in London, the Hyde Park community known as the most expensive residential area in the world.

But by 2015, the company had stopped producing OLED TVs. The company claims that the market is not yet ready to accept high cost technology. Instead, it decided to focus on developing LCD screens, which are backlit and enhanced by so-called quantum dots. Semiconductor nanocrystals can emit different colors of light and improve image quality. Televisions using this screen are called QLED TVs.

Stopping OLED TV seems to be a mistake

Now it seems that stopping the production of OLED TVs seems to be a costly mistake.

OLED TV has become a leading technology in the high-end market due to the sharp decline in production costs. At present, high-end TV refers to TV with a size of 55 inches or more, priced at 2500 yuan (15905 yuan).

Now, Samsung is the only large TV manufacturer that does not produce OLED screens. Although its TV business profits are less than 3% of Samsung’s total profits, Samsung’s profits mainly come from its semiconductor and mobile phone business. But for it, losing its leadership in the high-end TV market is a heavy blow.

OLED and QLED TV’s online reviews in the past few years have shown that South Korea’s LG electronics and Japanese SONY’s OLED TV have gained a lot of fans because of their excellent image quality.

In particular, critics say OLED TV has a more realistic color, high resolution, attractive design and more reasonable prices.

But that does not mean that Samsung’s QLED TV does not have their own supporters. Their image quality has also improved and prices have declined, but they are not the first choice for critics.

Ross Jan (Ross Young), chief executive of Display Supply Chain Consultants, a market research firm, said: “the share of OLED TV in the high-end TV market is growing, and it is a direct result of its excellent image quality. Samsung may have made a mistake in its product strategy in 2017. It should not overemphasize product design and neglect image quality.

According to research firm IHS Markit, Samsung’s share in the global high-end television market last year was only 18.5%, down from 54.7% in 2015. At the same time, SONY and LG have surpassed Samsung, occupying 36.9% and 33% of the market share respectively.

Of course, Samsung is still the largest TV producer in the world, and it has held the title for 12 years. Samsung also claims to be the biggest high-end TV maker. Samsung’s market share is more than 40%, according to GfK, a market research firm.

More efficient production

Samsung Electronics decided to build its TV business on LCD technology, according to people familiar with the matter, a decision made by the company after listening to the company’s now disbanded strategic office.

The source said: “the office proposes to focus on LCD instead of turning to unproven OLED technology, which will be more Likotu.”

The reason is that the TV business is struggling with the decline in profits, sources said. The company believes that LCD technology may be more profitable than high cost OLED technology.

The only problem is that when Samsung made the decision, LG is developing a more efficient manufacturing process to create OLED screens.

LG said the retail price of a mainstream LG 55 – inch OLED TV dropped from 15 million won in 2013 (about $14056) to 3 million won ($2811) this year.

Samsung said its biggest reason for not producing OLED TVs is the problem of screen aging.

However, LG said on its American website that despite the possibility of aging on almost any display screen, it has solved the problem by technology, which prevents damage to the screen and corrects short-term problems.

The profit data illustrates the problem

Last month, the impact of the struggle on corporate performance became more apparent.

LG said on Thursday that its TV sector’s profit grew by 77% and its profit margin reached a record 14% in the quarter ended March.

Samsung Electronics announced Thursday that its consumer electronics division’s quarterly profits fell by 32%, which sold televisions and household appliances. The company said its quarterly revenue was down from a year earlier, partly because the company changed its product line and stopped selling low-end and medium priced TV sets.

SONY’s television business has lost 800 billion yen (about $7 billion 400 million) in the past 10 years, but in the fiscal year up to March 2017, this part of its business was turned into profit.

In order to make profits, SONY has reduced the number of global markets and diversified the supply chain, and has also provided OLED TV and LCD TV. In addition, it also gave up the LCD joint venture with Samsung.

The SONY strategy worked. In terms of US dollar revenues, SONY’s share of the global TV market last year is only 10.2%, but it ranks first in the high-end market.

John Soh, an analyst at Shinhan Investment, said the company’s operating profit margin reached 10.7% last September to December.

IHS’s data show that the prospects for Samsung in the high-end TV market are likely to deteriorate further. This year, 71% of the sales are expected to come from OLED TV, up from 51% last year.

Choong Hoon Yi, head of the OLED Research Institute and a former Samsung display engineer, said Samsung seems to have made a mistake, but it didn’t seem to be a mistake at the time, because Samsung thinks OLED technology is too immature. When asked whether it was planning to restart production and sales of OLED TV, Samsung said it would focus on QLED and micro LED technology to lead the high-end market.

Last month, Jonghee Han, President of Samsung TV, said: “our strategy has not changed.” Han Zongxi said.

Some analysts say Samsung may not fail because it can counter the price.

Online channel data show that Samsung’s Q7F 55 inch QLED TV launched in 2018 was initially priced at $1900, down from last year’s $2500. Meanwhile, the initial price of LG 55 inch C7 OLED TV was $3500 last year, and the starting price of C8 this year is US $2500. (Little Fox)

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