Korea’s electronics giants Samsung and LG are grappling with faltering television businesses as slack demand in wealthy countries and nose-diving display prices combined to dent their second-quarter earnings.

Samsung Electronics, the world’s top TV producer, estimated its operating profit at 3.7 trillion won ($3.5 billion) in the three months to June, down nearly 27 percent year-on-year. LG Display, the runner-up, saw its net income plunge 96 percent to 21.3 billion won from 554.8 billion won.

Despite robust growth in emerging markets, frail demand in debt-stricken Europe and the slow recovery in the U.S. dragged down global sales.

The manufacturers also failed to balance a prolonged oversupply as they raised output according to early predictions that indicated the market would begin picking up in the second quarter.

According to DisplaySearch, prices of LCD panels for large size TVs and light-emitting diode versions remained low in July, extending a two-year weak streak. Mobile panel prices inched down compared with two weeks earlier.

“(The firms) missed their LCD TV set production targets by 10 percent in May,” the California-based research firm said in a report. “To ease the inventory risk and better control the supply chain, most TV brands are being cautious in their production plans, including Chinese vendors.”

On top of that, customers have turned away from mind-boggling price tags and the complexity of the high-end devices in the living room.

Samsung and LG are rolling out a massive collection of bigger, thinner and slicker panels ― LCD TV, LED TV, 3-D TV and Smart TV for example. And they carry features that allow customers to access the Internet and a wide range of applications while watching TV. But the products were not worth the prices as high as 500 million won per set as too many options confused users and limited use, industry observers said.

“TV makers have been developing new features to entice consumers to trade in even recently purchased sets that are just a few years old, but newer features are not yet strong drivers of new purchases compared to fundamentals like trading up in size or getting a flat panel TV,” said Paul Gagnon, director of North America TV research at DisplaySearch.

Early this month, Samsung merged its suffering LCD unit into a newly formed Digital Solutions division to be headed by Kwon Oh-hyun, chief executive of the company’s semiconductor business.

Chang Won-kie, the LCD arm’s ex-chief executive, was removed from his post to play an advisory role to Kwon in a move seen as a demotion holding Chang responsible for the unit’s lackluster performance.

Meanwhile, LG Display cut its sales estimates for this year “well below the previous 220 million units,” citing economic uncertainties.

Chief executive Kwon Young-soo said he has received responses from customers saying “they had no clue which product to buy or the prices were higher than actual value.”

“It’s difficult to anticipate for the second half but we should cut costs and make cheaper back-light units to drive up demand,” he told reporters, referring to the most expensive LCD components along with color filters.

Such a gloomy outlook would limit the growth rate of the large-size display market to a mere 1.5 percent this year compared with 31.4 percent a year before, according to Samsung Economic Research Institute.

DisplaySearch also revised down its outlook for the global LCD TV market to 210.5 million units this year, 6 million units lower than its earlier estimates.

It projects the LED TV market to reach 100 million units worldwide for the first time in 2012 and then more than double in 2013. Shares of LED TVs within the LCD TV products would top 67 percent next year, from less than half this year.

As for 3-D TVs, the segment will likely expand eight-fold this year and continue to grow rapidly, the firm added.

By Shin Hyon-hee (heeshin@heraldcorp.com)