LG Profits: OLED Bet Pays Off.
Gamble big. Win bigger?
LG has announced record earnings for its first three months of the year. The South Korean electronics manufacturer made 1.11 trillion won ($1.03 billion) in profit. The company saw an overall 15.12 trillion won ($14.1 billion) in revenue. These are the highest first-quarter figures in company history.
The sector that performed the best was LG’s home entertainment division. It reported a 76.5-percent increase in operating profit year on year. That's a pretty huge rise. This was largely driven by the sale of high-end OLED and LED 4K TVs. LG’s biggest rival, and TV market leader, Samsung, is also focusing on higher-end sets. However, they saw revenue reduce, during the same quarter. This was partly due to the removal of less expensive products from its lineup.
Nevertheless, both companies expect TV sales to be strong in the second quarter. Largely because of the spike in TV sales that came with the World Cup in June. The competition is the biggest single sporting event in the world and if OLED is the driver behind the rise in sales then LG are in a great position. LG’s OLED, and their affiliate LG Displays, essentially have a monopoly on OLED panel production.
LG Display have said that demand for OLED panels is growing. They also claim that it's becoming more profitable, thanks in large part to lower manufacturing costs.
Samsung, on the other hand, doesn’t make OLED TVs at all. Instead, the company is heavily pushing quantum-dot LED TVs. Their long-term goal is to have MicroLED, where every pixel has its own LED backlight.
The company also recently announced the UK's first 8K TV to go on general sale. However, there is very little native 8K content that can be viewed on it.
At the moment Samsung appear to have been outflanked by their bitter rivals. A few years ago, when Samsung decided to persist with LED tech, OLED was costly to manufacture and there was no guarantee that consumers would pay the extra for the technology.
Nevertheless, LG's OLED bet appears to have paid off. Consumers, especially at the high end of the market, appear to be favouring large OLED panels over Samsung's QLED.
But is this a blip? Will Samsung's dominance continue? Or will the lack of innovation, in OLED, start to see them fall from their position as the leading TV panel maker?
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