Boston, MA -- (ReleaseWire) -- 05/01/2014 -- The South Korean consumer electronics is mature, meaning growth rates will be below those of emerging markets. We expect the market will remain in positive growth territory over the medium term but growth will be slow, with a forecast CAGR of 3% 2014-2018 to US$18.7bn in 2018. In the short term, high household debt levels will be a constraint on consumer spending and high penetration rates mean there are limited first-time buyer opportunities. However, consumer appetite for innovative products means we have a bright medium-term outlook. Tablets, convertibles/hybrids and emerging technologies such as OLED and ultra-HD TV sets and wearable computing devices offer medium-term growth potential.
Headline Expenditure Projections
- Computer Hardware Sales: US$4.9bn in 2013 to US$5.1bn in 2014, +3.1% in US dollar terms. A booming tablet market and indications of growing consumer demand for hybrids and ultra-thin notebooks utilising Windows 8 and Intel's Haswell chipsets will sustain growth in market value.
- AV Sales: US$3.9bn in 2013 to US$4.0bn in 2014, +2.8% in US dollar terms. After contraction in 2013 due to TV market saturation and cannibalisation of digital camera demand by multifunctional smartphones, but we expect the market to begin recovering from 2014.
- Handset Sales: US$7.4bn in 2013 to US$7.1bn in 2014, -3.0% in US dollar terms. Smartphone market saturation means vendors will be reliant on upgrade/replacement sales, and we expect the market will decline in value in 2014 under pressure from saturation and price erosion.
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Key Trends & Developments
The smartphone market in South Korea is one of the most mature smartphone markets globally, with penetration of 68.6% at the end of 2013, limiting opportunities for growth. However South Korea remains one of the most lucrative markets with research from H113 showing the market to have the highest replacement rate and average selling price for handsets out of the OECD markets. Local vendors Samsung and LG, and to a lesser extent Pantech, continue to dominate the market, and we do not foresee a significant shift in the short-to-medium term. There is potential for these vendors to receive a boost in sales through innovation such as flexible screen technologies and wearable accessories.
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