Samsung Electronics, Sony Join Hands Again

Samsung Electronics and Sony will invest a combined three billion dollars in their joint venture S-LCD, news reports said yesterday.

Samsung Electronics President Choi Gee-sung, Vice President Lee Jae-yong and S-LCD President Chang Won-ki recently held a closed-door meeting with Sony CEO Howard Stringer at the International Consumer Electronics Show, or CES, in Las Vegas.

Shortly after the meeting, Sony Vice President Hiroshi Yoshioka and S-LCD President Chang began negotiations on details and reportedly agreed to invest three billion dollars in the joint venture.

Both companies had joined forces in 2004 in setting up S-LCD to secure a stable supply of LCD panels. They have continued to invest in the company and expanded production to eighth-generation LCD panels.

Their close partnership was confirmed in 2004 with the signing of a cross-license contract to provide more than 10,000 patents to each other for free. Last year, they expanded their production lines for eighth-generation LCD panels.

Speculation is rising, however, that Samsung and Sony’s relations have weakened due to the lack of further investment plans for a next generation production line. The two companies are cooperating in parts production but are in fierce competition in the TV market.

In addition, Samsung cannot afford to invest alone in the next-generation production line that will cost three billion to four billion dollars.

This unstable collaboration attracted controversy in early 2008, when Sony announced that it would obtain tenth-generation LCD panels from Sharp, not from S-LCD. Samsung hurriedly said there was no problem in their ties, but suspicion lingered.

In addition, Samsung in August last year decided to purchase LCD panels for monitors from LG Display, leading to speculation that Korea and Japan had begun competing against each other in the LCD market.

Yesterday’s announcement of the joint investment plan, however, is expected to accelerate bilateral cooperation.

Samsung Vice President Lee Jae-yong is known to have played a decisive role in restoring collaboration between the two companies. He had been criticized for having no concrete achievements.

His appearance at the electronics expo was his first abroad since he returned to the fore of the company’s management as chief operating officer last month. The restoration of the two companies’ partnership is considered his first achievement at the position.