SEOUL: Samsung Electronics has increased of nearly 18% in its purchases of TV LCD panel units in December, compared to a year ago. For the Fiscal year 2014, this was a growth of 13% in purchases. The number grew by 34.5% in November.
The growth in LCD Panel procurement can be attributed to the rising shipments of ultra-HD and large screen TVs. Competitor LG Electronics also saw December procurement rise by 14% while Sony Corp (ADR)(NYSE:SNE) saw procurement fall by 1.8%. This is the 10th consecutive month when Sony has cut orders to focus on profitability instead of volume. Two mid-level Chinese tech firms, Sichuan Changhong Electric Co., Ltd. and Hisense Co., Ltd. saw large growth in LCD panel procurement by 195.2% and 32.2% respectively. Japanese firm, Sharp Corporation also saw a large increase in purchases of 100.3%.
Sony’s order cut has led to a lowering of its annual TV shipment target by 6.4% to 14.5 million from 15.5 million units.
The introduction of Smart TVs which are equipped with application processors have seen sales growth of almost 72% over the past two years according to research data provided by IDC. The margins however have been low for TV makers, which have now opted for providing their own content offerings as means to boost revenue. This approach is led by Sony which through the PlayStation Now service is compensating for low margins. Samsung, not to be left behind, is also looking for TV commerce prospects.
Smart TV sales comprised around 35% global TV sales for the second quarter in fiscal 2014, which was 34.3% growth year-over-year.
In the ultra HD TV segment, top brands like Samsung, LG, and Sony are facing completion from little-known company, VIZIO, Inc. (a privately held producer of consumer electronics based in US), which has introduced its ultra HD P series TVs with a price tag of $999.99 for a 50-inch set while the other three big firms have an average price for it of $1,600. The three companies together will account for nearly 39% of the 4K TV unit sales for the year. Vizio has done for TVs what Dell did for PCs, that is sell them for less but offer comparable features to the premium priced brands. Vizio TVs feature new technologies such as direct LED backlighting as well as decoding chips to support online viewing of services such as Amazon, Netflix, and UltraFlix.
