Sharp and Sony
have reached a basic agreement to form an LCD manufacturing joint venture, in
a move that continues a months-long realignment of key players in the LCD panel
business.
The two companies aim to conclude a definitive deal by the end of September
that will see a new LCD plant already under construction by Sharp taken over
by the joint venture. The plant in Sakai in western Japan is being built at
a cost of about ¥380 billion (US$3.5 billion), and under the joint venture
plan Sony will shoulder 34 percent of the cost of the factory.
The move represents a major shift for Sony, which has previously been investing
in LCD panel production with South Korea's Samsung Electronics. The two companies
currently compete with Sharp and produce LCD panels in South Korea through S-LCD,
which has a factory at Samsung's Tangjeong facility.
But the new alliance will mean Sony will team with Sharp for its most advanced
LCD panels.
When complete, the factory is expected to be the most modern of its kind in
the world.
It will be a so-called "10th-generation" plant. That means it will
be able to accept sheets of mother glass -- from which several panels can be
made -- of 285 centimeters by 305 centimeters. Sharp said it will be able to
produce six LCD panels in the 60-inch class, eight panels in the 50-inch class
or 15 panels in the 40-inch class on each sheet.
The area of each sheet is 60 percent larger than the eighth-generation sheets
used at Sharp's current cutting-edge Kameyama factory in Japan. This will translate
to a lower per-inch cost for panels produced on the line -- something of great
importance in the highly competitive flat-panel TV business.
Initial capacity at Sakai, which is scheduled to begin production by March
2010, will be 36,000 mother glass sheets per month, increasing to 72,000 sheets
over an undisclosed period of time.
Corresponding with their investment levels Sony will get one-third of the panels
and Sharp will get the other two-thirds from the factory.
But in November, Samsung said it would invest 2 trillion Korean won (US$2.1
billion) in a new LCD production line at Tangjeong without participation from
Sony. The line is scheduled to begin production in the third quarter of this
year and will produce panels 50 inches and larger -- the same types of screens
that Sharp is targeting with its new factory in Sakai in western Japan.
Hooking-up with Sharp won't mean an end to the alliance with Samsung, said
George Boyd , a spokesman for Sony in Tokyo.
The LCD market has seen a big realignment in the last few months and Tuesday's
announcement continues this. It also reinforces Sharp's position as the leading
LCD producer in Japan.
Toshiba recently forged an alliance with Sharp under which it will procure
LCD panels of 32-inches and larger from Sharp, while Sharp turns to Toshiba
for some of the chips used in its TVs.
As a result of that new alliance, Toshiba will sell its shares in IPS Alpha
Technology, an LCD production joint venture with Hitachi and Panasonic. Hitachi
is also planning to leave the venture, with both Toshiba and Hitachi transfering
their stakes to Panasonic, effectively making IPS Alpha a subsidiary of Panasonic.
As a result Panasonic plans to invest ¥300 billion in a new LCD manufacturing
plant in western Japan.
The market for LCD TVs is highly competitive and the deals reflect the difficulty
and high-cost of remaining at the leading edge of the LCD panel market.
In the fourth quarter of 2007 revenue from sales of LCD TVs surpassed that
from old-style CRT (cathode ray tube) sets for the first time, according to
DisplaySearch. The number one LCD TV vendor was Sony, which had a market share
of 19.5 percent during the quarter, DisplaySearch said. In second place was
Samsung with a 19.3 percent share followed by Philips and Sharp tied at 10.1
percent and LG Electronics at 7.7 percent.
