A slump in TV sales caused LG Display to post record losses after the company struggled to offset the effects of slowing consumer demand. LG Display is the part of LG that makes display panels and is the only supplier of standard OLED panels to other TV manufacturers – almost all the best OLED TVs use their displays except those that use QD-OLED (made by Samsung Electronics ) .
The South Korean manufacturer published its financial results for the third quarter of 2022 earlier this week, with the report revealing an operating loss of more than $540 million for the quarter.
That number marks a considerable contrast to the more than $370 billion profit the company posted a year earlier.
LG Display pointed to Russia’s invasion of Ukraine, worsening energy crisis, rising inflation and waning post-pandemic demand by the numbers.
The company is also facing increasing pressure from Chinese screen makers who are increasing their market share.
But it appears at the consumer level, where the problems with its OLED TV business currently lie, with cash-strapped shoppers opting to keep the fire on a high-end TV.
The company is the world’s largest supplier of OLED panels and also one of the largest manufacturers of LCD screens, and has been hit hard by falling prices for both types of panels.
Crucially, this week’s financial report emphasized that demand for premium OLED panels and TVs has fallen to an “unprecedented level”, with sales particularly low in Europe.
The company now says it plans to cut its 2022 investment budget by more than $700 million, while flexibly operating its OLED production lines to meet demand.
The report adds that LG now intends to accelerate its reduction of LCD capacity in China and accelerate its shift to OLED technologies in general.
Analysis: LG’s finances look bleak – but there must be OLED light at the end of the tunnel
LG Display’s balance sheet looks a little worrisome after the dramatic losses announced this week, but this sober report reflects some things we already knew.
Demand for TVs in general is surprisingly low right now amid a cost-of-living crisis that affects almost every corner of the world, leaving consumers very sensitive to prices.
We also knew that investment in OLED production next year was minimal, which should allow the company to stabilize its ship if it wasn’t spending tons of extra investment.
The big potential upside for consumers is that something will have to happen to spur interest once again in OLED TVs next year, and in a cost-of-living crisis, that needs to be a drop in prices for consumers.
LG Display was not very affordable with cheaper OLED panels in 2022, which meant that the budget OLED TV market was limited to the LG A2 and Philips OLED707. Vizio and Hisense didn’t offer new cheap OLED models in 2022, for example.
This now appears to have been a mistake, leading us to predict that next year could see deeper discounted OLED TVs from a much wider range of brands. And in the meantime, there’s a good chance we’ll see great Black Friday OLED TV deals in hopes of giving the technology a boost in people’s minds next year.