Sony teams up with Sharp to make TV display panels

Demand for slimmer and bigger TVs is growing around the world.

Sony president 88 224 (photo credit: AP [file])
Sony president 88 224
(photo credit: AP [file])
Sony and Sharp are tying up in the flat-panel TV business, with Sony investing in a Sharp plant for making liquid crystal displays, both sides said in a statement Tuesday. Sony Corp. had fallen behind in developing flat panel TVs, and does not make its own liquid crystal displays for its TVs. It has been buying LCD panels from a joint venture it has with Samsung Electronics Co. of South Korea, and Sony said Tuesday its deal with Samsung would continue unchanged. With the latest partnership with Sharp, it can hope to ensure a stable panel supply for its TVs. Demand for slimmer and bigger TVs is growing around the world. Although the televisions use various panel technologies, LCD is the leading technology so far, along with plasma display panels. "Besides attractive products and a solid supply chain, ensuring a stable procurement of panels is critical," Sony president Ryoji Chubachi said at a joint news conference with Sharp president Mikio Katayama. "This is an important step in Sony's effort to become the world's No. 1 TV maker." Japan's business daily The Nikkei reported in its Tuesday editions that Sony plans to invest 100 billion yen ($926 million) in a plant Sharp Corp. is building to make panels for flat TVs. The companies said the amount of investment was still undecided. They will set up a joint venture by April, 2009, for producing the displays, with Sharp taking a 66 percent stake and Sony 34%, they said. Sony's cash investment would be a plus for Sharp's 380b. yen ($3.5b.) new plant for making panels for larger 40-inch, 50-inch and 60-inch flat TVs. Construction began in December, and the plant is expected to be running by March 2010. Sony shares rose more than 1% Tuesday on the Tokyo Stock Exchange. Sharp ended unchanged. Analysts said the move was positive for both companies, as it would give Sony more of an option in buying panels for its TVs called Bravia, while Sharp can reduce the investment burden for panel production. Katayama acknowledged that Sharp and Sony will be competing intensely as TV makers, but he added they will also be able to cut costs and increase scale of production through the joint venture. "This will strengthen the LCD business in Japan," he said. "We will do our utmost aiming to become the world's number one." Both Sharp and Samsung make flat TVs under their own brands, and Sony, Sharp and Samsung are competing for their piece of the global flat-TV pie. Some surveys have shown Sony momentarily leading in LCD TV sales, but Samsung is now believed to be No. 1. Osaka-based Sharp, which is struggling to gain overseas brand recognition, still trails Samsung and Sony. Sharp's Aquos brand of LCD TVs is extremely popular in Japan. Sony management failed to recognize how quickly slimmer TVs would take off, partly because of the huge success it had enjoyed in developing and selling high-quality old-style televisions. Its failure in flat TVs was a major reason for its faltering earnings several years ago. Sony has staged a comeback recently under the leadership of Howard Stringer, a Welsh-born American who became chief executive in 2005. In December, Toshiba Corp. said it would team up with Sharp to buy LCD panels for Toshiba flat-panel TVs. At that time, Toshiba said it would drop panel-making from its business, selling its stake in a joint venture panel maker, led by Matsushita Electric Industrial Co., which makes Panasonic-brand products. Matsushita, the world's leading maker of plasma TVs, has been strengthening in-house production of panels, including LCD displays, counting on solid flat-panel TV sales in coming months. Matsushita is also supplying Japanese electronics maker Hitachi Ltd. with LCD panels. On Monday, Standard and Poor's Ratings Services raised its outlook on Sony to "stable" from "negative," citing improved profits at its core electronics unit and gradual recovery in its struggling PlayStation 3 video game operations.