Korean component majors to cut capex on weak Q3, LG Innotek survives on iphone boon

South Korea’s display and other electronic component majors LG Display and Samsung Electro-Mechanics are cutting back investment as they enter a slump after strong inflation killed pandemic-driven global liquidity binge, while Apple suppliers LG Innotek and BH Co. benefited from robust iPhone sales.

According to third-quarter disclosures on Wednesday, LG Display reported an operating loss of 759.3 billion won ($536.60 million), widened from a loss of 488.3 billion won in the second quarter. Its sales amounted to 6.77 trillion won, down 6.3 percent on year and up 20.76 percent on quarter. The display major dominant in OLED TVs suffered from shrinking demand from spike in produce and consumer prices around the world.

According to market researcher TrendForce, the world’s TV shipments will likely fall 3.8 percent from a year ago to 202 million units, the lowest volume in 10 years.

Panel demand for medium and premium TVs has sharply decreased in Europe amid energy crisis and inflation from protracted war in Ukraine.

LCD panel prices have hit the historic bottom. The panel maker would accelerate shuttering of LCD TV panels and roll down production in China.

“We will keep investment to the minimum and save costs until financial health radically improves,” said LG Display CFO Kim Sung-hyun at a conference e call.

It will focus business on OLED, aggressively seeking smaller flexible panel market such as wearables and automotive display.

On the same day, Samsung Electro-Mechanics disclosed operating profit amounted to 311 billion won in the quarter ended September, off 31.8 percent on year and 13.6 percent on quarter. Its sales posted 2.38 trillion won, falling 6.4 percent from a year ago and 2.9 percent from a quarter earlier. Although its sales in high-pixel camera modules and multilayer ceramic capacitors (MLCCs) increased, reduced demand in IT components for smartphones and personal computers pulled down overall performance in the quarter.

“We will trim slightly down our investment plans for the year,” said an official from the firm.

LG Innotek and BH Co. survived the downturn in the economy owing to their supply contract for Apple’s new model, iphone 14. LG Innotek posted an operating profit of 444.8 billion won, up 32.50 percent on year and 53.43 percent on quarter. Its sales recorded 5.38 trillion won, up 41.86 percent on year and 45.50 percent on quarter. BH Co. also registered good results, helped by its supply of flexible printed circuit boards for iphone 14. Its operating profit amounted to 59 billion won, up 35.04 percent from a year earlier and 145.42 percent from a quarter ago. Its sales reached 473.2 billion won, up 41.81 percent on year and 39.57 percent on quarter. The positive impact from Apple’s new model will continue in the fourth quarter, according to market experts.

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