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Electronic Component Firms Grapple with Sluggish Market, Q3 Results Reflect Strain

Companies like LG Display and Samsung Electro-Mechanics face downturn despite major smartphone releases; Supply chain challenges persist
South Korea
l 011070.KO s 009150.KO l 034220.KO Tech 350 Mid and Small Cap 2000
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Electronic component manufacturers face a challenging third quarter, marked by a market slowdown in the IT sector. Despite high-profile smartphone launches from Apple and Samsung Electronics, crucial suppliers grapple with lingering industry-wide hurdles and supply chain delays.

LG Display’s recent report revealed a 29.3% YoY dip in Q3 sales, totaling 4.7853 trillion won. The company further marked its sixth consecutive quarter of operating losses, with a deficit of 662.1 billion won. Observers noted delayed supplies of organic light-emitting diode (OLED) panels for smartphones impacting performance.

Meanwhile, LG Innotek reported Q3 sales at KRW 4.7636 trillion, an 11.6% drop, and operating profit at KRW 183.4 billion, down 58.8% YoY. Sales in its optical solutions division, a key supplier of iPhone camera modules, fell by 12% compared to last year.

While an anticipated boost from the delayed iPhone 15 is projected for Q4, LG Display remains optimistic about the year-end peak season in the TV market, potentially steering them towards profitability.

Samsung Electro-Mechanics’ Q3 saw sales of 2.36 trillion won and an operating profit of 184 billion won. While sales slipped by 1% from the previous year, operating profit dipped by 40.8%. Rising smartphone shipments, particularly essential components like multilayer ceramic capacitors (MLCCs), were observed. However, intensified price competition, partly due to a weakening yen, resulted in lower average selling prices for products.

A spokesperson from Samsung Electro-Mechanics acknowledged potential weakening in component sales for Q4 but emphasized the anticipation of continued growth in high-performance electronics and industrial products. The company plans to enhance product competitiveness and broaden its lineup, focusing on high-value offerings.

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