Samsung and LG Again Scale Down The Production

HIGHLIGHTS

  • LG & Samsung are prepared to reduce their TVs and home appliances production.
  • Samsung & LG held meetings to counter & avert the current crisis.

A major development came to light lately on the 24th Friday that the two major giants from the S.Korea, LG & Samsung, are prepared to reduce their production of TVs and home appliances due to inflation, high-interest rates, and Russia’s invasion of Ukraine, to coordinate with reduced consumer demand and current adverse economic conditions.

As reported by Shinhan investment, a big investor and Samsung Electronics supplier, South Korean tech giant Samsung Electronics also cut down its smartphone production by ten per cent last month by 35%, which is a reduction from the average monthly production from early Jan to April of 2022, this was followed by a 10% decrease from an upcoming quarter of the year compared to last one. As reported by Shinhan investment, a big investor and Samsung Electronics supplier. 

According to DSCC, which provides critical market intelligence, insights, guidance, and consulting on the display industry to its clients-Samsung took two more years to make the inventory turnover in this Q2 about 90 days. The turnover represents the time stock turn into sales. Hence shorter the period, the lower the cost burden.

According to the revelations to FSS, inventory assets for the Q2 this year increased by 53.9 per cent to 49.84 trillion won (38656935189.60 USD$) as compared to last year.

The Financial Supervisory Service is South Korea’s integrated financial regulator that examines and supervises financial institutions under the broad oversight of the Financial Services Commission, the government regulatory authority staffed by civil servants.

With many Galaxy, A mid-tier phones not being sold, Samsung has stuck with 50 million smartphones in stock earlier this month also.

From media sources, it was learned that the global TV market sales were marginalized to 4.9% YoY basis, but QLED sales increased 23% to 3.3 million in Q1 this year.

According to the industry, one of the officials anonymously stated,

“High inflation, high-interest rates, and economic recession are not problems for one specific company but the entire industry. It is not a problem that one company can solve.”

This was the result of global inflation and the pandemic effect, which caused the semiconductor industry to lag due to a shortage of components. Samsung has been in a pendulous state due to the outpouring of the inventory.

Expansion of premium products was discussed at the company’s Global Strategy Council this Tuesday, where Samsung focused on sales of the premium products targeting the markets such as Europe & USA, where purchasing power is excellent.

On the hand, LG electronics has also decided to reduce the production of home appliances to deal with lower demand.

an LG Electronics official stated-

“There was an increase in demand during the pandemic, but we are transitioning to an endemic, so we have been adjusting our production accordingly,”

The condition is serious as it was the first time in three years since 2019 that the LG held a strategy briefing session in the presence of Chairman Koo Kwang-mo, and the CEOs of major affiliates were required to conduct a meeting between the business community, decisions. Rectification was done to avert & counter-current crisis.

We’ll have to watch out, as this would impact the market slightly bad or worse for the customers.

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