Bye Bye TV: Sony, Sharp & Samsung Flee Big Displays – Tabs Takeover
LCD TVs once hailed as the consumer ‘must have’ now appears to be hitting a wall, as the tablet category, kicked off by the iPad and followed closely by a stream of Android clones, now reigns supreme.
So much so that three major TV makers, Sony, Toshiba and Hitachi, today announced a merger of its display businesses to create a bulwark against the likes of Samsung and Sharp, lower costs and get a grasp of the small display industry.
Read Team LCD: Sony, Toshiba & Hitachi Shock Merger As Tabs Boom Here
The Japanese display giant aims to “establish a leading global company by integrating three companies’ businesses” to make displays for tablets and smartphones as well as invest in OLED technology, it said today.
“The global market of small- and medium-sized displays is expected to grow rapidly due to anticipated strong demand for high resolution, high value-added products” the trio said.
The tech powerhouse will be ran in partnership with government innovation body, backed by 200 billion yen in public investment, a welcome funding boost for all three makers, who have recorded dramatic falls in their display operations, with Sony noting dropping global demand for its flagship Bravia LCDs in its most recent financial report.
And Samsung and LG, two of the top Australian TV brands, are also to follow suit, with reports this week suggesting both Korean smart 3D TV makers are planning to slash panel production and convert lines into tab and small display factories.
Samsung, the current No.1 display maker globally, are said to be to be planing to cut LCD TV production by a massive 80% and concentrate on notebook and tablet screens, with LG also set to cut production as its panel business struggles with major losses, and chop capital investment by 25%.
“We plan around 3 trillion won ($2.8 billion) of capital spending next year and have no plans to build a new factory,” a LG Display spokesman confirmed.
In July, the 3D Cinema TV maker reported an 87.3% plunge in net profits for Q2 and its display division posting a 96 per cent dip in net profits to 21.3 billion won.
This comes as a sales of Android handsets grew over 350% during Q2 alone and tablet sales reach record heights, and estimated to be worth $35 billion as an industry next year, with global shipments of around 80 million, according to JP Morgan Securities forecasts.
|In June, Sharp said it would cut large display production from October and focus on small screens in its TV-panel plant in the Japan’s Kameyama city.
Read Tab Threat: LG Slash LCDs As iPad 2 & Androids Call The Shots Here
Sony net profit also slumped into negative territory in its most recent quarter, to -$191m, compared to a profit of 25.7bn yen the same period in 2010, blamed partly on losses in its consumer business, including TVs, forcing it to downgrade LCD sales forecasts even further.
The Bravia maker, who has never made a profit selling flat panel TVs, has seen global sales fall to 22 million during the past 12 months, had previously said it would reconfigure its TV production operations.
In the past, Sony has partnered with Samsung and Sharp in the production of flat panel TVs. It also banked on 3D to give them an edge in the TV market, although boss Howard Stringer is confident the new venture will help resurrect its troubled display business.
“By integrating each partner company’s wealth of display expertise and know-how, I am confident the new company will become a driving force for technological innovation and new growth in the rapidly expanding small- and medium- sized display market, said Stringer, Sony CEO and President.
“It’s been one of the losers,” Keith Wirtz, the chief investment officer at Fifth Third Asset Management, which owns 40,000 Sony shares, previously observed about its TV business.