Sony, Sharp tie up to produce LCD panels

Sony Corp. said Tuesday it will jointly produce liquid crystal display panels with Sharp Corp. in a bid to oust Samsung Electronics Co. as the leader in the global LCD TV market.

Sony and Sharp will set up a joint venture in April 2009 to operate a state-of-the-art LCD factory that Sharp is building in Sakai, Osaka Prefecture.

The factory is expected to start operations in fiscal 2009.

Sony plans to invest more than 100 billion yen to acquire a 34-percent stake in the joint venture, while Sharp will hold the remaining 66 percent.

Sharp expects a total of 380 billion yen in investments in the factory.

"The global TV market is projected to grow to 100 million units in fiscal 2008," Sony President Ryoji Chubachi told a news conference.

"We aim to capture a global market share of 15-20 percent to become the world's largest TV maker," Chubachi said.

Sony ranks second in global shipments of LCD TVs after South Korea's Samsung. Sharp comes in third.

Sony plans to increase procurement sources to meet growing global demand for LCD TVs. The company expects sales of 10 million units for the current fiscal year.

For Sony, Sharp will become the second joint venture partner in LCD-panel production after Samsung.

Sony and Samsung operate S-LCD Corp., an LCD-production joint venture in South Korea. Sony has also purchased LCD panels from Samsung itself and Taiwanese companies.

Sharp's factory will use large glass substrate known as 10th-generation mother glass. Sony plans to purchase LCD panels of 40 inches or larger.

Sharp will be able to reduce its share of the huge capital outlays and recoup its investments early, thereby limiting the associated risks.

The company also expects to increase the factory's output, raise its capacity utilization ratio and improve its overall cost competitiveness.

The Sakai factory is expected to produce the equivalent of about 13 million 42-inch LCD panels annually.

Sharp is separately expanding capacity at its core plant in Kameyama, Mie Prefecture, to the equivalent of about 20 million 32-inch LCD panels annually by this summer.

Toshiba Corp. and Pioneer Corp. have already decided to procure LCD panels from Sharp for their LCD TVs.

Currently, about 20 percent of the LCD panels Sharp produces are used in TVs under brands other than Sharp's.

Sharp expects to increase the number of TV makers that procure its panels and raise the percentage to more than 50 percent in fiscal 2010.(IHT/Asahi: February 27,2008)