Samsung Electronics held the first-half global strategy meeting for the video display (VD) and digital appliances (DA) institutional sector at its Suwon campus on the 17th. The meeting, presided over by DX chief Roh Tae-Moon (president), carries more weight than a routine check-in. In particular, rebuilding the TV business in crisis and expanding the platform business emerged as key agenda items.
Unlike the semiconductor (DS) institutional sector, which is enjoying an unprecedented boom, the finished goods (DX) institutional sector—especially the VD (video display) and DA (digital appliances) divisions in charge of TVs and home appliances—is facing a fundamental crisis. The reality shows up in the numbers. Operating profit reversed from 3.65 trillion won in 2021 to an operating loss of 200 billion won last year. Although it barely returned to a profit of 200 billion won in the first quarter of this year, the industry expects a high possibility of worsening results in the second half. DS Investment & Securities projected this year's VD and DA operating margin at -0.6% and said operating losses could widen to 326 billion won.
The global TV market itself is in a contraction phase. According to market researcher TrendForce, global TV shipments in the third quarter of last year were 49.75 million units, falling below 50 million units for the first time. Above all, as Chinese TV corporations, once the strongest challengers, threaten Samsung not only in their domestic market but also overseas, analysis is emerging inside and outside the company that the model of sustaining the business solely through hardware sales has reached its limit.
Facing this structural crisis, Samsung Electronics chose Lee Won-Jin as its answer. The VD division head has typically been filled by engineers with TV development experience, but Lee, a marketing and services expert from Google and Adobe who joined Samsung Electronics in 2014, led the expansion of service businesses such as Samsung TV Plus. It is the first time in about 20 years, since former Vice Chairman Choi Ji-Sung in 2007, that someone from a non-development background has become VD division head.
This global strategy meeting is the first occasion for President Lee Won-Jin to formalize his platform business blueprint before heads of overseas subsidiaries worldwide. As he said upon taking office that the company must "leap beyond a hardware-centric business to become an AI full-stack corporations encompassing chips and services," observers said a key agenda item will be whether that declaration is translated into concrete execution plans at this meeting.
The most urgent task to resolve at this strategy meeting is the speed and scope of restructuring. Samsung Electronics on May 6 officially halted sales of digital appliances and TVs in mainland China and notified local distribution channels and partners. It is a withdrawal after 34 years, since entering the market shortly after the 1992 normalization of relations between Korea and China. The Chinese sales subsidiary's net profit plunged 44%, from 300.7 billion won the previous year to 168.1 billion won.
Restructuring is not limited to China. The DA division decided to outsource certain appliance lines such as dishwashers and microwave ovens, and it also finalized the closure of its Malaysian plant, a key overseas production base. In its first-quarter investor relations (IR) briefing, Samsung Electronics said, "In the appliances business, profitability pressure is mounting due to intensified competition and tariff, so we are pursuing selection and concentration across the business." In the industry, there is a view that this exit from China is only the beginning of a portfolio overhaul across all business groups.
A source familiar with Samsung Electronics said, "This meeting is expected to discuss measures to platformize the business by growing Samsung TV Plus, a free ad-supported streaming TV (FAST) service, into a revenue source; the transition of the entire lineup to AI TVs; securing OS competitiveness; and attempts to transplant Apple- and Google-style platform ecosystems into the TV industry."