Boston, MA -- (SBWIRE) -- 03/19/2013 -- BMI View: We project that South Korean consumer electronics spending will grow by about 3% in US dollar terms in 2013 to US$14.4bn, with a moderation in consumer demand expected. In future, maturity in many market segments means that growth will be driven to a large extent by product innovations such as smartphones and touch-screen handsets, as well as LED and 3D TV sets. The roll-out of digital TV broadcasting ahead of analogue switch-off in 2013 will help support sales of premium TV sets. Smartphones, tablets and internet-enabled TV sets were among the main growth areas in 2012, with OLED TV set technology a new competitive battleground for vendors. However, the market remains a challenging for many vendors, due to the dominance of domestic giants such as Samsung and LG.
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Headline Expenditure Projections
- Computer Hardware Sales: US$4.7bn in 2012 to US$4.7bn in 2013, +1% in US dollar terms. The forecast in US dollar terms has been upwardly revised, and growth areas will include demand for more mobile form factors such as tablets, as well as Microsoft's Windows 8 operating system.
- AV Sales: US$2.7bn in 2012 to US$2.8bn in 2013, +3% in US dollar terms. Forecast in US dollar terms downwardly revised, with TV set product innovation expected to provide the most dynamic development.
- Handset Sales: US$6.6bn in 2012 to US$6.9bn in 2013, +5% in US dollar terms. Forecast in US dollar terms unchanged, with smartphones the main revenue growth driver.
Risk/Reward Ratings: South Korea's score was 60.5 out of 100.0, which gave it an unchanged seventh place in our latest Asia CE Risk Reward Ratings (RRR) table. South Korea was boosted in our table by high Industry Risk and Country Risk scores of 70 and 83.7, respectively. However the country's overall ranking was deflated by a relatively low Country Rewards score of 40, which in part reflects the barriers to entry for non-South Korean market-entrants.
Key Trends & Developments
- A combination of new technologies such as OLED and internet-enabled TV, and more competitive pricing, should help to support AV demand. The falling price and profitability of LCD TV panels led Samsung and LG to announce in 2012 that they will cease domestic production of LCD TV sets, to focus on LED. A new focus for vendors is OLED TV sets, with leading local players like Samsung and LG vying to become market leader in this area of technology. These new technology Internet-enabled TV sets will remain a significant growth area.
- With an increasingly saturated market, handset revenue will be driven by product areas such as smartphones and high-definition camera phones. As of May 2012, smartphones made up 50.9% (26.77mn) of the mobile phones in the country. Korean telecoms regulatory body the KCC predicts that the number of smartphones in the country would reach 34.8mn (54.1%) by the end of 2012.
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