Sony and Sharp’s LCD Linkup
February 28, 2008The Japanese rivals are working together in liquid-crystal-display TV panels to cut costs and hedge against the risk of an economic slowdown
Consolidation it wasn’t. But on Feb. 26, when Sony (SNE) said it would pick up part of the $3.5 billion tab for Sharp’s (6753.T) planned TV-panel plant, it seemed that two of the world’s biggest TV makers were finally admitting there are limits to the industry’s frenzied expansion.
Of course, this being Japan, both consumer-electronics makers would argue that the “c” word doesn’t apply. Indeed, Sharp President Mikio Katayama and Sony President Ryoji Chubachi stressed that their agreement was over joint ownership of a plant in Osaka and joint production of TV panels and other components, not any type of merger.
The deal leaves Sharp with two-thirds of what will be the world’s most advanced liquid-crystal-display factory, while Sony will own the remaining one-third. They plan to produce both LCD panels and LCD modules that come with components such as a backlight and chips. Though their giant-screen TVs will share key technologies inside, Sharp’s Aquos and Sony’s Bravia will remain separate brands.
Tieup’s Big Benefit: Lower Costs
Why is Sharp sharing precious tech know-how with a rival? After all, Sharp, the world’s third-largest LCD TV maker, wants nothing more than to close the gap with the reigning champ, Korea’s Samsung Electronics, and runner-up Sony. Every TV exec knows that the best way to get ahead in the fiercely competitive business is to be the first to invest in more efficient LCD plants. Only a few manufacturers have the resources and the brain trusts to stay ahead in cutting-edge TV manufacturing technologies.
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