It’s Prime Day…

It’s Prime Day…
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While Prime Day is not considered in the same league as Alibaba’s (BABA) ‘Singles Day’, it does tend to be a significant selling day (actually 2 days) and generates roughly the same in sales for Amazon (AMZN) as does ‘Cyber Monday’ for a large group of retailers and CE companies.  There are many tricks that retailers use when reporting numbers for such shopping holidays, so we take most of the numbers with a grain of salt, but no matter how much the numbers vary from source to source, they are significant, although dwarfed by Singles Day, which is based on live streaming (sort of an internet QVC) and generates 6 to 8 times more revenue, depending on whose data you use.
Since we have been tracking Samsung’s (005930.KS) Mini-LED/QD TVs since they appeared last year, we took another look at the 2021 and 2022 Samsung ‘Neo’ and ‘QD’ TV lines to see if Prime Day had any significant effect on prices.  That said, the TV industry is currently in an odd position in that TV panel prices have fallen to near pre-pandemic levels, which should translate into much lower TV prices than seen last year, but at the same time other components remain at peak or near peak levels and the cost of transportation has become another cost that has had significant negative impact on the TV supply chain.  Coupled with inflation, and 2020/2021 consumer pull-in purchases, the prospects for a robust pre-holiday season are less than ideal.
As Samsung has both 2021 and 2022 Mini-LED/QD models, we break down the data into yearly segments with the 2021 line seeing a 1% increase in price since the last check (18 days ago), while the 2022 line saw a drop of 4.7% during the same period.  One unusual factor that appeared in both 2021 and 2022 lines was the fact that for the first time the two 98” Mini-LED/QD TVs in both lines, which had been priced at $15,000 each, saw the first discount this week since they have been offered.  The new price of $13,000 was a 13.3% discount, without which the 2021 line would have seen a 1.7% overall price increase (rather than a 1% increase) and the 2022 line would have seen a 4.0% decline rather than a 4.7% decline.
Notwithstanding the 98” TV discounts, the 2021 line had 13 of 36 models (36.1%) at their lowest ever price and 1 (2.7%) at its highest ever price, with 7 models up and 6 down since the last check.  The 2022 line had 30 (85.7%) at their lowest prices and 4 (11.4%) at their highest since release, with 3 up and 21 down.  We took the comparison a bit further in the table below which shows the following:

• The Model, Resolution (8K/4K), Features, and display size
• The Initial Price of the 2021 and 2022 sets and the difference if any
• The Current Price of the 2021 and 2022 sets and the difference between that price gap
• The discount between current price and initial price for both years
• A timeline check where we match the current (2022) model prices with the 2021 model prices at the same point in time, which in this case is 90 days from the 2022 release date.  This indicates whether the discounting is occurring more or less aggressively than last year.

 
Here are our conclusions:
 

• The initial offering price of the 2022 Mini-LED/.QD and QD only line, excluding those models that were not offered in 2022, was 4.3% lower than the equivalent sets offered in 2021. 
• Currently the 2022 models are 19.1% higher in price than the 2021 models in aggregate.  The 2021 models, which have been out for 418 days are priced 29.3% below their initial price while the 2022 models, which have been out for 90 days, are priced 12.6% below their initial price. 
• If we look at the 2021 line 90 days  after their release, there are 14  (45.2%) 2022 models that are discounted more heavily than  at the same point last year, 15 (48.4%) that are  discounted less than last year, and 2 (6.5%) that are discounted at the same level as last year’s models.  This leads us to conclude that other than the initially lower price of the 2022 models, Samsung has not been any more aggressive in discounting the 2022 models this year than last, despite the competition in the Mini-LED/QD TV space.

We believe that while Mini-LED arrays have come down in price over the last 400+ days, along with LCD panel prices, the price of other components has increased, along with transportation costs, but given that an LCD display open cell is ~25% of the total manufacturing cost of a TV, the overall   cost of the ‘other’ manufacturing components and processes remains an offset to the panel price reductions.  That said, there are certainly margin considerations here, and with Mini-LED/QD TVs being considered ‘premium’ TVs, they will likely carry higher margins for Samsung than more generic LCD TVs, which means Samsung needs them to preserve overall TV margin. 
While TCL (000100.CH) is a serious price competitor in the Mini-LED/QD TV space, LG Display’s (LPL) Mini-LED/QD line is less so as it is more closely priced to the Samsung line, with much depending on the particular market and whether TCL is a presence.  In the US we believe Samsung  offers 3x the number of overall TV models than TCL and ~30% more than LG, and while this does not equate to unit volume or sales directly, it does give some indication as to the  choice between price reductions or marketing dollars for Samsung.  With Samsung holding a 20%+ share of the TV market and TCL under 10%, the decision to hold price seems one that Samsung has made years ago, especially on its premium products, so we expect, while there will be additional discounting on the 2022 line going forward, just as there was on the 2021 line last year, Prime Day is not the inflection point one might expect for the Mini-LED/D TV world.