Thursday, September 17, 2009

Korean Twins LCD TV Makers

Before 2008, LG was not as competitive as Samsung, Sony and Sharp on LCD TV production.

Since after Samsung launched its LED TV (they called) March 2009, LG was aggressively working on a better Picture quality LCD TV using Direct Back lit LED Display than Samsung’s Side lit Back lit unit. However since Mar-June promotional Campaign of Samsung brought success in sales record of 500,000 units. LG was determined to work on direct and as well edge lit back lit LED TV. LG’s next Competitor is Samsung. LG has made a sales target of 500,000 units to benchmark Samsung‘s 2,500,000 unit in 2009.

Both Samsung and LG will be looking at the sales target of 6 millions sets in 2010. From this point of view, LG is building up a more aggressive plan for their LED manufacturing line in Korea, and Samsung remains its Production of LED in China. In view of the cost structure of China and Koreas is different. We believe LG has to work on a more efficient way for LED Manufacturing in order to gain a higher profit margin. Likely the selection of their LED manufacturing equipment supplier will be crucial for highest possible throughput with min. investment. As labour cost comparison of manufacturing LED in Korea and in China has a big difference. In Korea Now an operator is approximately $750 whereas an Operator in Tianjin area is about $180.00 a month.

In case both Samsung and LG could achieve the sales target of 6 Million sets of LED BLU TV in 2010, they will be remaining the World Largest LED BLU TV makers accounting almost 70 Percent of the total number of the LCD TV we make in the whole year.

With this target of LED manufacturing plan in LG, they have to invest 150B Wons in its Kwangju Factory in Korea in fall 2009 till Q4 2010.

And LG may use for 60% direct Lit and 40% Edge LIT TV to meet different market segment on LCD TV.

Base on an assumption that the production volume of Vizio, Sony, HP, Toshiba, Sharp and other China Maker will be also ramping up. We will see that there will be a price erosion on the LED TV in 2010. We could estimate the same size of TV selling 2010 will be 15% less than the same one selling in 2009.
With the drop of ASP, the whole Entertainment TV market will becoming hot and there is a trend for more people to go into the TV replacement programme. With the current buying practice of the people in Asia and USA, we forecast that he TV Sales will be one of the major drivers for all electronics OEM and Component supplier, and the IC industry will also be a beneficiate due to the demand for the driver and ICs in 2010.

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