LG Display posted record-breaking losses this week as it struggled to deal with reduced consumer demand for OLED and LCD TVs.
The company, a subsidiary of LG Electronics that manufactures display panels for TVs, monitors and smaller devices, is noted as being the world’s only supplier of standard OLED panels to the TV industry.
In its third quarter financial results, LG Display reported an operating loss of $540 million, a stunning reversal from the $370 million profit it recorded in the same period one year earlier.
In a press release, LG Display cited the Russian invasion of Ukraine, the resulting energy crisis, sky-high inflation and declining consumer demand as the reasons for its poor financial performance.
Added to those problems, LG Display faces increased pressure from Chinese display makers in the LCD industry. At the same time, prices for both LCD and OLED panels have declined significantly due to lower demand. As a result of this lower demand, TV makers have built up backlogs of panels that they need to sell before they can go purchasing any more.
LG Display is implementing a number of measures to survive the economic downturn. It says it will slash its 2022 investment budget by more than $700 million, while “flexibly operating” its OLED production lines to match demand. As part of these plans, the company is likely to reduce its LCD panel manufacturing capacity in China, accelerating its shift to OLED.
LG Display’s report does of course reflect a lot of facts that were already known - demand for TVs is currently much lower than it has been due to a cost of living crisis that has spread to almost every country in the world, reducing consumer’s ability to make larger purchases. LG Display's plans to invest less in OLED production were no secret either.
There could be an upside for consumers at least. TV manufacturers are inevitably going to have to do something to try and stimulate more consumer interest in OLED TVs, especially when next year’s refreshed lineups are introduced. And with many people struggling to survive, the only thing that TV brands can really do is lower their asking prices.
This year, we didn’t see an awful lot of commitment to budget price OLED TVs, with the segment really limited to the LG A2 OLED and the Philips OLED707. The likes of Vizio, Hisense and Sony didn’t introduce a budget-priced OLED TV this year. However, with most brands likely to struggle when it comes to shifting their higher-end OLED models in 2023, we could well see some lower-priced OLED TVs from a much broader range of brands.
