TVs Held Up by World Cup Demand... Will Memory Costs Become an Even Greater Burden in the Second Half?

[Financial News] The global TV market saw shipments rise in the second quarter, buoyed by World Cup-related demand. However, a sharp increase in memory prices in the second half is emerging as a potential setback. If the memory shortage persists, TV manufacturers that have endured cost pressures are expected to face growing difficulties in balancing profitability protection with price competitiveness.
According to market research firm Omdia on the 3rd, global TV shipments totaled 48.8 million units in the second quarter, up 3.6% from the same period a year earlier. Demand for TV replacements increased ahead of major sporting events, while promotions by leading manufacturers continued, contributing to the rise in shipments.
Analysts said the impact of rapidly rising memory prices on TV shipments in the second quarter remained limited. Omdia explained, "TV manufacturers appear to have partially absorbed the cost burden by continuing to promote their existing product lineups while using memory inventories secured in the past at relatively low prices."
However, it remains uncertain whether this cost protection will continue in the second half. According to TrendForce, the contract price of 4-gigabyte (GB) Double Data Rate 4 synchronous dynamic random-access memory (DDR4 SDRAM) used in 4K TVs had risen more than fourfold year over year as of the beginning of this year. The increase reflects growing demand for high-capacity, high-value memory for artificial intelligence (AI) servers, which has led memory manufacturers to prioritize production capacity for those products. As a result, supplies of general-purpose memory have tightened, increasing cost pressures on TV manufacturers.
South Korean TV manufacturers have also officially acknowledged the burden of rising costs.
LG Electronics’ MS Business Division said during its second-quarter earnings conference call, "In the second half, we expect cost pressures to increase due to higher prices for raw materials, including memory." Samsung Electronics also explained that, regarding the second-quarter performance of its Visual Display (VD) business, sales and profit increased year over year due to the impact of sporting events, but profitability deteriorated from the previous quarter because of rising costs.
For TV manufacturers, a key concern is typically how much of the increase in costs, including memory expenses, can be reflected in product prices. If manufacturers cannot sufficiently pass higher costs on to consumers, profitability may deteriorate. On the other hand, raising prices could make it more difficult to compete with Chinese manufacturers, which emphasize price competitiveness. This is particularly true for mid- to low-priced products, where analysts say it is difficult to fully reflect higher costs in selling prices because consumers are more price-sensitive.
As a result, cost pressures in the second half could affect TV manufacturers’ product strategies. Omdia forecast that the shift from lower-resolution products to 4K models could accelerate, as supplies of low-capacity memory products remain particularly tight.
If memory prices remain elevated for an extended period, manufacturers may have greater incentive to increase the sales share of 4K and premium products, which are relatively easier to sell profitably, rather than simply raising product prices. South Korean TV manufacturers are already seeing a shift toward expanding sales of premium products. LG Electronics’ average TV selling price in the first half of this year rose 9.9% from last year’s annual average. LG Electronics cited increased sales of premium TVs, including organic light-emitting diode (OLED) models, as the main reason.

[email protected] Reporter Park Ji-yeon Reporter