S.Korea’s IT parts makers reeling from sluggish smartphone, TV sales performance

 

South Korea’s major information technology parts makers like Samsung Electro-Mechanics, LG Innotek and LG Display Co. suffered huge drops in first-quarter performance, with analysts blaming the bad results on lower sales of smartphones and TVs.

Such companies, however, are expected to see improved earnings from the second half of the year with the release of new products like the Galaxy Z 5 smartphone series and iPhone 15.

Samsung Electro-Mechanics on Wednesday said its first-quarter operating profit of 140.1 billion won ($104.4 million) marked a 65.9% fall from the same quarter last year. Sales declined 22.7% to 2 trillion won as demand for IT devices such as PCs continued slowing due to the global economic downturn.

The company’s component division in charge of multilayer ceramic capacitors saw sales drop 32.8%, those of the optical communications solutions unit handling camera modules fell 23.5% and those of the package solutions division whose main product is packaging substrates dipped 7.9%.

“In the second quarter, we will raise the proportion of automotive parts by business unit and focus on diversifying our customers,” a company source said. “Second-quarter sales will grow compared to those of the first.”

LG Innotek also struggled, with  first-quarter sales dropping 33.2% to 4.3 trillion won and operating profit falling 14.5% to 145.3 billion won.

“Slowing demand for IT products due to the global economic downturn caused profits to fall,” a company source said.

Yet a positive factor cited was the higher supply of high-performance camera modules for smartphones and parts for electric and self-driving vehicles.

LG Display suffered an operating loss of 1.1 trillion in the first quarter, finishing in the red year on year.

Sales fell 31.8% to 4.4 trillion won because of inventory adjustments, onset of the offseason and decline in the LCD TV sector.

“From the second half of the year, we will see a restoration of inventory soundness in the entire industrial ecosystem,” LG Display Chief Financial Officer Kim Sung-hyun said. “We expect to return to the black in the second half thanks to better order-type performance like higher demand for panel purchases and more shipments of mobile products.”

Write to Jeong-Soo Hwang at hjs@hankyung.com