The position of domestic TV manufacturers is being shaken by the fierce pursuit of Chinese companies. Amid a global economic slowdown and stagnation in TV demand, Chinese firms are encroaching on the market with low-cost offensives, leading to a sharp drop in the performance of Samsung Electronics and LG Electronics. Domestic companies plan to strengthen their market leadership by expanding premium TVs such as organic light-emitting diode (OLED) and Neo QLED, where they have a technological advantage, instead of the liquid crystal display (LCD) dominated by China.
According to the home appliance industry on the 3rd, the operating profit of Samsung Electronics and LG Electronics in the second quarter of this year fell by 55% and 47%, respectively, compared to the same period last year, resulting in a halving of profits. The downturn in Samsung Electronics was primarily due to poor performance in the semiconductor division, but the TV business also saw a decline. Despite strong performances in other sectors, LG Electronics' losses in the MS institutional sector, including the TV business, contributed to underwhelming overall results.
Samsung Electronics' Visual Display (VD) division, responsible for the TV business, recorded second-quarter sales of 7 trillion won, a 7% decrease from 7.5 trillion won in the same period last year. Compared to 7.8 trillion won in the previous quarter, the decline was even greater at 10%. The combined operating profit of the VD and home appliances also dwindled to 200 billion won, falling short of last year's 500 billion won and down by 100 billion won from the previous quarter's 300 billion won.
LG Electronics' media entertainment (MS institutional sector) recorded an operating loss of 191.7 billion won in the second quarter, reversing to a loss from an operating profit of 126.8 billion won in the same period last year. While revenue and operating profit increased in other divisions such as home appliances (HS institutional sector), vehicle components (VS institutional sector), and heating, ventilation, and air conditioning (ES institutional sector), the MS institutional sector recorded a deficit and continued its poor performance following an operating loss of 50.4 billion won in the previous fourth quarter.
In contrast, Chinese companies have significantly increased their market shares, threatening domestic companies. According to market research firm Omdia, Samsung Electronics maintained the top position in global market share by shipment for 19 consecutive years since 2006, but has recently been on a downward trend. Samsung Electronics' market share, which was 21.9% in 2020, declined to 19.8% in 2021, 19.6% in 2022, 18.6% in 2023, and is projected to drop to 17.6% in 2024. LG Electronics' share also fell from 11.5%, the second position in 2020, to 10.8% last year, dropping to fourth place, following Chinese companies.
During this period, the market shares of Chinese TCL and Hisense increased from 10.7% to 13.9% and from 8.1% to 12.3%, respectively. The rise of Chinese companies is attributed to significant national support, enabling them to procure panels and key components domestically and conduct low-cost offensives primarily in emerging markets.
In this process, lawsuits related to technology and trademark infringements and consumer damages are also increasing. Samsung Electronics won a trademark infringement lawsuit against Chinese TCL regarding 'The Frame' in Germany last March. TCL and Hisense have also been embroiled in class-action lawsuits for marketing products without QLED technology as QLEDs and selling them at high prices.
In this situation, the domestic industry plans to continue securing competitive advantages in premium products beyond the mid-to-low priced LCD segment and to push for market expansion. The strategy is aimed at achieving differentiation based on the areas where we still maintain leadership, instead of the market led entirely by Chinese suppliers from LCD panels to the entire supply chain. According to Omdia, global TV shipments are expected to decline by 0.1% this year, but shipments of OLED TVs are anticipated to increase by 6.3%.
In the high-end TV market priced over $2,500, the share of OLED TVs is projected to expand from 43.1% in 2023 and 57.9% in 2024 to 63.1% this year and 68.8% next year. By 2027, it is expected that OLED TVs will surpass 70.1%, establishing themselves as the dominant force in the high-end market.