Senior global executives from LG and Samsung have used CES 2023 to spell out their future, after massive profit slumps, and it appears CE and appliance are not high on their future roadmaps when it comes to investment and spending.
At a local level, LG is refusing to talk about their local CE business, while Samsung is spelling out their local roadmaps and taking questions.
As LG Electronics struggles to make a profit, CEO Cho Joo-wan has given a clear indication that the future for the business is automotive components and health care, with their installed base of OLED TVs being used to communicate with consumers while managing their smart home products.
Samsung Electronics Vice Chairman and co-CEO Han Jong-hee
LG Electronics CEO Cho Joo-wan
At CES 2023, both Joo-wan and Samsung Electronics Vice Chairman and co-CEO Han Jong-hee tipped a tough year ahead for the two powerhouse South Korean brands, with both key executives talking up alternatives to consumer technology, which is not delivering the profits for either organisation.
“Overlapping crises, including the prolonged economic recession, geopolitical tension, supply chain risks and climate change, have drastically increased uncertainty in the market,” Han said at CES.
“How the company overcomes the multiple crises will determine the success or failure in the future,” he added.
At LG, Cho Joo-wan has high hopes for their burgeoning automotive solutions business, pledging to diversify its business portfolio to tackle challenges this year.
“Our automotive solutions business has made a turnaround 10 years since the launch. Now that the business is on the highway, what is left to do is to step on the accelerator,” Cho said during a press conference at CES.
There was no mention of appliances or their battles to turn a profit in the TV and display markets.
Earlier in the week, ChannelNews attempted to talk to Tony Brown, the Head of Home Entertainment Marketing at LG Electronics Australia, as to why he had been forced to slash prices on their premium TVs weeks after they were launched in Australia in 2022, and why LG Electronics is cutting back on TV models for the mid to value consumer markets in Australia.
We also wanted to question him about the availability of OLED panels from LG now appearing in cheap value and mid-market TVs and the impact on LG premium TV sales.
He simply walked away when we asked him a question. He has also failed to return several telephone calls when we sought answers to questions about their Australian TV and audio business.
Unlike Samsung, who at CES have made Jeremy Senior the Vice President of Consumer for the Australian market available for questions, LG has failed to facilitate to make their senior executives available for interviews.
Industry watchers expect LG’s automotive business to turn a profit this year after nearly a decade of losses.
Revenues from automotive components have hit the US $8 billion mark.
The renewed push for the automotive business comes after LG forecast a 91.2 per cent plunge in operating profits in the fourth quarter last year in its earnings guidance announced on Saturday Australian time.
Citing increased costs as the key factor behind the sluggish earnings, Cho predicted the growing costs could be lowered to a normal level starting early this month.
For the whole year, the company is expected to post record sales, he added.
The CEO also hinted that LG was preparing to launch a new-generation in-vehicle infotainment system that integrates all navigation, audio and video solutions, to expand its product line-up for electric vehicle chargers through merger and acquisition deals, and to beef up production of cutting-edge automotive displays.
At CES 2023, LG Electronic was not the only major CE brand looking for new markets while handling thorny questions about a slump in profits.
Samsung also forecast its operating profit in the fourth quarter in 2022 would plunge 69 per cent on-year to US $3.4 billion, which was far below consensus of analysts.
Sales for the October-December period were estimated to have declined 8.6 per cent compared to a year ago.
Weakening demand for chips and home appliances due to global economic downturn was cited as the reason. High exchange and interest rates also affected consumer sentiment, vice chairman Han Jong-hee said.
In times of hardship, he said Samsung always stuck to the simple truth to always focus on the fundamental values.
For future growth engines, the world’s largest memory chip and smartphone maker is looking into robots and metaverse, Han said.
Samsung recently invested US $46 million in a South Korean robot maker called Rainbow Robotics.
The robot maker, which became the first listed robot company to secure an investment from Samsung, was founded in 2011. The company introduced its flagship collaborative robots in 2020.
Samsung is also serious about the metaverse, though the hype over the virtual reality space appears to have peaked and subsided pretty quickly of late.
“As it is with all technologies, it always attracts attention when it first begins. But technology goes to where it is the most needed, and I think the metaverse is also in that flow,” Han said.
He made no mention of the failure of 3D TVs or the lack of 8K TVs at CES 2023.
“Companies have not stopped developing technology (for the metaverse), they are all working hard. But they are looking at where this technology can go and more details will be out as time passes. Now, the metaverse and digital twins are a hot topic.”
The CEO, who oversees smartphone and home appliance businesses, also pledged to elevate Samsung’s ailing presence in the Chinese market, where its market share in smartphone sales has remained at a tiny 2 per cent.
Citing a new business innovation team in China launched in 2021, Han said, “We have found what the problem is. To give an example of our TV line-up, our strategy was largely centred on the US and Europe, but we have learned China has its own system of preference.”
Han admitted Samsung’s products came short of Chinese consumers’ expectations and vowed to launch more tailored products and services exclusively for Chinese consumers.
