TV is in serious trouble as LG is ‘likely’ to report losses in current quarter and slash investment.
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Why? Two words: tablets and smartphones.
iPad 2, Android tabs and smartphones are increasingly eating into LCD and smart TV market share, it appears, with Korean giant LG the latest maker to report major woes in the category, cutting investment by a quarter, according to a Reuters report.
The dip in PC demand is also hitting LCD display demand and the global recession isn’t helping matters either, particularly in debt ravaged US and European markets.
LG, one of the top TV brands in Australia, releasing its 3D Cinema TV range with much aplomb in April and passive 55″ 3D technology just last month, now appears to be painting a much duller picture of one of its core businesses, TV panels.
“We plan around 3 trillion won ($2.8 billion) of capital spending next year and have no plans to build a new factory,” a LG Display spokesman confirmed.
In July, it reported 87.3% plunge in net profits for second-quarter of the year with LG’s display division posting a shocking 96 per cent dip in net profits from 554.8 billion won in 2010 to 21.3 billion won, the same period this year.
This comes as a sales of Android handsets grew over 350% during Q2 alone and although LG is a player in this market also with smarthones like Optimus, it is far from a front runner, unlike Korean rival Samsung, and the takeoff of the tablet category offering mobile internet TV has also gobbled display sales.
“LCD makers will keep 2012 investment plan conservative and LG is also likely to cut spending again as visibility is very low due to weak demand especially from Europe and the United States,” John Soh, Shinhan Investment & Securities analyst, said.
“LG is likely to report losses widening in the current quarter and the outlook for the next nine months or so is dreadful due to weak PC and TV demand.”
However, analysts predict its not the end of the road for LCD’s just yet, forecasting a demand resurgence in future quarters.
“Once it recovers and the supply has not increased because panel makers did not expend production, the industry can return to a healthy state,” one analyst said.
LG is already said to have cut TV sales forecasts by 20% earlier this year, joining the likes of Sony and Samsung as it battles mobile display dominance.
The growth of iPads is however, a double edged sword for LG as it is one of Apple’s main LCD suppliers.
