According to a report by The Elec, Samsung temporarily halted operations at its TV factory in Kaluga, near Moscow, Russia, in light of the ongoing Russian – Ukrainian war. The report claims the suspension of operations was because Samsung faced obstacles in the supply of important components for TVs such as panels. Not only Samsung, but LG is also evaluating suspending operations at its home appliance and TV factories in Russia.
Samsung Electronics’ main concern is that if the macroeconomic situation persists for a long time, the company’s business strategy will be severely disrupted. Samsung Electronics has previously announced that considering the current geopolitical development situation, the company’s product shipments to Russia have been suspended. The company further said in an email statement that it is actively monitoring the development of this complex situation. Samsung has suspended all exports to Russia, from chips to smartphones and consumer electronics.
Research firm Omida predicts that if tensions between Russia and Ukraine persist, it could reduce Samsung TV shipments by 10% to 50%. Samsung Electronics plans to make up for the decline in shipments in these markets by targeting other markets.
Samsung halts LCD production
A few years ago, Samsung and LG were the major players in the global LCD market. However, there are now several Chinese panel manufacturers in the market. More so, these Chinese companies have surpassed Samsung and LG to become the main LCD panel manufacturers in recent years. Chinese companies such as BOE and CSOT are rapidly expanding their market shares. This makes it very difficult for the South Korean manufacturers to compete. Presently, BOE is now the world’s largest manufacturer of LCD panels.
Originally, Samsung was to leave the LCD panel market at the end of 2020. However, there was a pseudo increase in prices and this made the company continue to operate for another two years. Nevertheless, looking at the current situation, Samsung will not wait until the end of the year. The price has been falling significantly and it is now on a free fall. By January this year, the average price of a 32 -inch panel was only $38, a 64% drop relative to January last year.
For this significant drop in price, Samsung will withdraw from LCD panel production half a year ahead of schedule. It will stop production in June this year. Samsung Display, a subsidiary of Samsung Electronics, will turn to higher-end QD quantum dot panels. The LCD panels that the company needs will turn to procurement.