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Samsung-LG Misstep on TV Screens Creates Opening for Sony

Samsung Electronics Co. and LG Electronics Inc. are reworking their strategies for high-end TVs after spending billions of dollars on a new display technology that’s behind schedule and costs almost $10,000 a set.

The misstep by the Koreans has created an opening for Sony Corp., Sharp Corp. and Chinese maker Skyworth Digital Holdings Ltd. Those companies are introducing TVs using conventional liquid-crystal displays that offer resolutions rivaling the new technology for about half the price.

The world’s two biggest television makers have struggled to profitably manufacture sets with organic light-emitting diodes, which have a brighter and sharper picture than the LCDs used in most TVs. Though both companies said they would mass-market OLED TVs last year, LG’s first model, priced at 11 million won ($9,900), hit stores in South Korea in January and Samsung still isn’t selling one.

Samsung and LG are now pivoting, with plans to boost output of LCD sets to maintain their dominance of the industry. Sony, meanwhile, is seeking to capture a greater share of the market for ultra-high definition TVs -- forecast to rise sevenfold by 2015 -- by expanding its range of LCD sets.

“Samsung and LG both misjudged the ultra-high definition market,” said Jeon Byung Ki, an analyst at E*Trade Korea Co. in Seoul. “Now they’re thinking they may have to stick with LCD technology for a while.”

Spokesmen for both Samsung and LG said their companies remain committed to OLEDs, yet they will expand their offerings of ultra-high-definition sets using LCD technology.

Sony’s OLED

E*Trade Korea predicts OLEDs will account for about 10 percent of TV shipments in 2016.

Sony in 2007 introduced the first OLED TV, with an 11-inch screen, though at $2,500 it failed to stoke demand. Last year, Sony and Panasonic Corp (6752). announced a partnership to develop more OLED sets.

Samsung started investing in facilities for OLEDs, used mostly in its Galaxy smartphones, in 2006. The company has spent 7.9 trillion won in the past two fiscal years developing OLEDs, both for TVS and its mobile devices. LG’s investment in OLED TV panels in 2012 and this year will total 1.1 trillion won.

The Koreans started moving away from LCDs because profits in the segment have been declining since 2004, and they needed a new growth market, according to Chung Won Suk, an analyst at HI Investment & Securities Co. in Seoul.

Profits at Samsung’s consumer electronics division, which includes TVs, fell by more than half, to 230 billion won, in the first quarter. LG said in April that profit at its TV unit dropped to 30 billion won from 164 billion won a year earlier.

“OLEDs aren’t offering much advantage in price and resolution as the technology needs more improvement,” said Chung. “It’s way too early to commercialize it, which is why the Korean companies need ultra-HD TVs.” (Excerpt from Bloomberg)


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