Sony’s LCD Deal Could Deal Blow to Samsung

Sony’s LCD Deal Could Deal Blow to Samsung. February. 25, 2008 03:14. iam@donga.com bookum90@donga.com.

A joint venture for TV liquid display panels between Samsung Electronics and Sony is showing signs of wear, as the Japanese company will begin procuring LCD panels from Sharp.

The Japanese business daily Nihon Keizai said Saturday that Sony is in the final stages of talks with Sharp to buy LCD panels. Sony has gotten its LCDs from Samsung and S-LCD, a joint venture between the two firms.

Sony is considering buying 10th-generation panels between 60 and 70 inches to be produced at Sharp’s factories in Osaka from next year.

Japanese media also say Sony is considering buying as early as this year panels of 40 to 50 inches that Sharp manufactures in its factories in Mie Prefecture.

Sony has procured 60-70 percent of its LCDs from S-LCD and Samsung and the rest from Taiwanese makers.

Samsung said, “Sony’s tie-up with Sharp seems to be a part of a diversification strategy in purchasing the remaining LCDs except for the volume supplied by S-LCD. The strategic partnership of Sony and Samsung has been and will be firm and stable.”

In other words, Samsung is not rattled over Sony’s move because Sharp takes away from the market share of Taiwanese makers, not Samsung’s.

The matter, however, is not that simple. Executives and working-level employees of the Samsung Group and Samsung Electronics held emergency meetings Saturday and Sunday to analyze the situation.

Electronics industry pundits say the ramifications could be great because the joint venture of Sony and Sharp is not a one-time contract to meet LCD shortages in the market; rather they could develop mid-and long-term cooperation by setting up a joint corporation.

Some speculate that the protracted investigation into Samsung’s slush fund scandals and Japanese manufacturers’ move to outpace Korean counterparts led to the change.

An electronics industry source said, “Samsung’s management is in paralysis due to the investigation and for its part, Sony can no longer wait for Samsung (as an LCD supplier). Sony’s changes to several of its procurement sources are a minus for Samsung in the global market.”

A high-ranking employee of Samsung Japan said, “The Hinomaru initiative (Japanese electronics manufacturers ganging up on foreign counterparts) could be realized. It could deal a blow to Samsung.”

According to DisplaySearch, the worldwide leader in display market research and consulting, Samsung led flatscreen TV sales last year with 18.7 percent of the world market. Sony was second at 17.1 percent and Sharp third at 11.7 percent.