A slump in TV sales has seen LG Display post record losses after the company struggled to offset the effects of slowing consumer demand. LG Display is the part of LG that makes screen panels, and it’s the sole supplier of standard OLED panels to other TV manufacturers – nearly all of the best OLED TVs use its displays, except those that use QD-OLED (made by Samsung Electronics).
The South Korean manufacturer published its financial results for Q3 2022 earlier this week, with the report revealing an eye-watering operating loss for the quarter of over $540 million.
That figure marks a sizeable contrast to the profit of over $370 billion the company recorded a year earlier.
LG Display pointed to Russia’s invasion of Ukraine, the worsening energy crisis, soaring inflation and waning demand post-pandemic for the figures.
The company is also facing mounting pressure from Chinese display manufacturers that are growing an increased market share.
But it appears at a consumer level where issues with its OLED TV business currently lay, with cash-strapped shoppers opting to hold fire on splashing out on a higher-end TV.
The company is the world’s largest provider of OLED panels while also one of the largest for LCD display manufacture, and has been hit hard by declining prices for both types of panels.
Crucially, this week’s financial report stressed that demand for premium OLED panels and TVs had dropped to an “unprecedented level”, with sales particularly low in Europe.
The company now says it plans to cut its 2022 investment budget by over $700 million while also flexibly operating its OLED production lines to match demand.
The report adds that LG now aims to hasten its reduction of LCD capacity in China, and accelerate its shift to OLED technologies overall.
Analysis: LG’s financials look gloomy – but there should be OLED light at the end of the tunnel
The LG Display balance sheet looks somewhat worrisome after the dramatic losses it announced this week, but that sobering report reflects a few things we already knew.
Demand for TVs overall is unsurprisingly down right now amid a cost-of-living crisis affecting almost all corners of the world that has left consumers feeling very price-sensitive.
We also knew that investment in OLED production next year was expected to be minimal, which should allow the company to steady its ship if it’s not splashing out tons of extra investment.
The big potential upside for consumers is that something’s going to have to happen to stimulate interest once more in OLED TVs next year, and in a cost of living crisis, that pretty much needs to be a drop in prices for consumers.
LG Display wasn’t very forthcoming 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 both didn’t offer new cheap OLED models in 2022, for example.
That now seems to have been a mistake, leading us to predict that the next year could see deeper discounted OLED TVs from a much broader range of brands. And in the meantime, there’s a good chance of seeing some huge Black Friday OLED TV deals, in the hope of giving the tech a boost in people’s minds heading into next year.