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Sony Sells Flat Screen Venture to Samsung for $935 Million

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Around 70% of LCD TVs will soon be made with at least generation 7 technology. (Image: Felipe Wiecheteck)
Around 70% of LCD TVs will soon be made with at least generation 7 technology. (Image: Felipe Wiecheteck)

BUSINESS

  • Sony faces $1 billion loss, marking fourth-consecutive fiscal year of losses
  • Samsung will continue supplying Sony with LCD panels
  • Samsung to unveil 55-inch OLED TV at Consumer Electronics Show

Sony will sell its almost 50% share in its S-LCD Corp flat-panel screen joint venture with Samsung Electronics to Samsung for $935 million. After Sony leaves the joint venture, which began in South Korea in 2004, it will opt for a cheaper outsourcing option to reduce costs in its television manufacturing business.

Sony also holds a 7% share in a joint liquid-cristal display (LCD) panel manufacturing venture with Sharp.

Sony says it is facing a loss for the fourth fiscal year in a row, which is expected to be in excess of $1 billion. The company has seen its revenue abroad whittled down by a strong yen.

In the last quarter of 2011, Sony will write down close to $850 million due to ending the joint venture with Samsung, while ultimately saving by cutting costs in its LCD activity.

Sony will continue to get a supply of LCD panels from Samsung, but without incurring manufacturing costs.

Sony Chief Executive Officer Howard Stringer announced almost $8.5 billion worth of acquisitions in 2011, which were to boost the company’s music and phone divisions while also introducing tablet computers. In the face of declining prices and high fixed costs, Sony has lost over 50% of its value, falling to $18 billion from over $100 billion in 2000.

Ranked number three among leading TV manufacturers, Sony first struck deals with Samsung in the 1990s as the latter used marketing and cost cutting to gain a good market position following the Asian financial crisis.

It was in this context that Sony agreed to the $2 billion LCD joint venture in South Korea. Sony and Samsung also launched the Blu-ray disc together. Samsung is still faring better than Sony, however, generating close to $15 billion in sales out of almost $135 billion in the last financial year. Sony however lost $3 billion in sales out of over $90 billion over the same period.

Samsung, LG To Launch 55-inch OLED Television

Samsung Electronics and LG Electronics are to unveil a 55-inch Organic Light Emitting Diodes (OLED) television in January 2012 at the Consumer Electronics Show in Las Vegas. OLED TVs are brighter, lighter and thinner, and have better contrast compared with LCD and plasma TVs.

At 55 inches, the display will replace Samsung Mobile Display’s 40-inch display as the largest display on the market. The two companies expected to sell around 50,000 OLED TVs in 2012, generating sales of almost $230 million.

Samsung Electronics is the largest technology firm operating in Asia, and is fifth in the worldwide IT index of market capitalization. Samsung’s market cap reached almost $137 billion in December, beating Oracle at just over $130 billion. Apple, Microsoft, EBM and Google remain ahead of Samsung.

Key Statistics – Global LCD Panel Market (source: Global Industry Analysts)

  • Around 70% of LCD TVs will soon be made with at least generation 7 technology.
  • Global LCD glass substrates market expected to exceed $467 million square meters by 2017, fuelled by large display demand.
  • The world TFT LCD panels market is expected to exceed 4.5 billion units by 2015.
  • China’s CDC TVs market is predicted to grow at a yearly rate of more than 25% through 2017, fuelled in part by state initiatives.
  • Over 75% of TV shipments in China have LCD technology.

By Ellsy O'Neill for
Ellsy O'Neill is a Paris-based writer, proofreader and translator. She covers industry, culture and current affairs.

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