Boston, MA -- (ReleaseWire) -- 01/28/2014 -- Although the South Korean consumer electronics is mature, meaning growth rates will be below those of emerging markets, we have a positive medium term outlook and forecast spending will grow by about 5.4% in US dollar terms during 2013 to $US13.7bn, from US$13.0bn in 2012. 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. New models of smartphones offering LTE, or the popular phablet category, are expected to fare well, while tablets, convertibles/hybrids and emerging technologies such as OLED and ultra-HD TV sets and wearable computing devices also offer medium-term growth potential.
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Headline Expenditure Projections
- Computer Hardware Sales: US$4.2bn in 2012 to US$4.4bn in 2013, +6.1% 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$2.6bn in 2012 to US$2.7bn in 2013, +2.6% in US dollar terms. The TV market will see the slowest growth in the consumer electronics market due to longer replacement cycles by new technology such as AMOLED displays, which should drive upgrades over the medium term.
- Handset Sales: US$6.2bn in 2012 to US$6.6bn in 2013, +6.1% in US dollar terms. Despite market maturity, a high handset replacement rate will ensure the market continues to grow.
Key Trends & Developments
South Korea is one of the most mature smartphone markets globally, but despite the high penetration rate, we do not expect a sharp slowdown in sales. BMI estimates smartphone penetration crossed the 65% mark in Q213, but the South Korean handset market remains lucrative and offers opportunities for growth through innovative products. Research from H113 shows the market to have the highest replacement rate and average selling price for handsets out of the OECD markets and we believe the availability of LTE services, and new products such as flexible screens, will encourage upgrades. 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.
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