Samsung and LG cut production due to falling demand

Samsung Electronics and LG Electronics have decided to cut production of their televisions and other home appliances in order to

cope with falling consumer demand foramid unfavorable economic conditions such as inflation and high interest rates, Koreatimes reports citing industry representatives. According to market research firm Display Supply Chain Consultants (DSCC), Samsung Electronics averaged 94 days of inventory turnover in the second quarter of this year, about two weeks more than the previous year. Inventory Turnover Days is the time it takes for inventory in a warehouse to turn into sales. The shorter the period, the lower the cost burden for the manufacturer, the authors of the portal explain.

Warehouse assets of Samsung Electronics in the firstquarter of this year, disclosed to the Financial Supervision Service, also rose by 53.9% over the same period last year. As inventories increased, Samsung Electronics reportedly notified parts suppliers of volume adjustments, signaling a decline in production. According to reports, Samsung Electronics has temporarily put new supply orders on hold due to rising inventories and concerns about global inflation. LG Electronics is also cutting production of its home appliances to cope with lower demand. “During the pandemic, demand has increased, but we are moving into an endemic, so we are adjusting our production accordingly,” said an LG Electronics spokesperson.