Sony pulls out of LCD joint venture with Samsung

By on December 26, 2011, 11:25 AM

Sony has agreed to end a seven-year-old S-LCD joint venture with Samsung Electronics and sell its nearly 50 percent stake to the South Korean company for $940 million. The move comes as Sony expects to record its eighth consecutive annual loss for its TV business in 2011 amid sluggish demand.

The Japanese firm will switch to cheaper outsourcing for LCD panels from Samsung and others rather than investing in their production, while Samsung pushes ahead with next-generation displays and S-LCD as a wholly owned subsidiary.

Sony, which is currently the world's third largest TV manufacturer behind Samsung and LG, will take a charge of about 66 billion yen ($846 US million) in the quarter ending December 31 after the deal closes. Despite the one-time loss, the company says the transaction will result in substantial savings going forward.

Over the past few years Sony has sold off TV factories in Spain, Slovakia and Mexico. It still retains four TV plants in Japan, Brazil, China and Malaysia. Some analysts say the $100 billion LCD TV market peaked last year and forecast it will shrink 3 to 4 percent annually. Looking to play it safe, Sony said in April it would not raise its stake in a separate LCD venture with Sharp for at least a year, and in August announced it would merge its small-panel business with the government-backed Japan Display.

Meanwhile, LCD manufacturers have been under increased scrutiny in the last few years for their alleged price-fixing practices. Though none of them actually admitted guilt, in a recent settlement Samsung, Sharp, LG Display, Hitachi and Chimei paid an estimated $388 million for their cartel activities. The settlement followed at least three more rounds of fines related to price fixing that go back to 2008.




User Comments: 2

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Guest said:

good move sony....

Guest said:

Niiiice now we can have more Samsung TV's instead of sony garbage

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