REPORTS PREMATURE ON SONY-SAMSUNG LCD VENTURE
Sony attempted Mon. to throw water on pervasive news reports originating from Seoul that it had tied up with Samsung in joint venture to produce LCD panels for TVs and PC monitors.
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Sony said it was talking “with a number of parties, including Samsung, regarding an investment” in LCD business but “at this point, a final decision has not been reached.” Reference to Sony’s possible investment in LCD operations has as its precedent company’s agreement with NEC last year to partly fund its capital spending on production of plasma display panels (PDPs) in Japan (CED June 7/02 p1). Sony emphasized then that its cash infusion of about $45 million wouldn’t involve taking financial stake in NEC’s PDP operations.
Nikkei reported that Samsung had plans to invest upwards of $17 billion in new production lines for LCD panels. Sony itself has said that it would start its own production of LCDs by 2005, having thus far sourced its necessary supply from Hitachi and LG.Philips LCD. Reports speculated whether Sony would find it much more palatable to seek alliance with existing display manufacturer rather than contributing entire $2 billion that’s estimated it would take to start new LCD plant from scratch. Nikkei estimated that LG.Philips LCD controlled 22% of global market for LCD displays, followed by Samsung at 19%.
Samsung and Sony are hardly strangers as possible strategic alliance partners, having announced only last month that they had agreed to strengthen their cooperative arrangement on Memory Stick-compatible products and media. Although Samsung-Sony agreement on LCD cooperative didn’t materialize Mon. as had been thought, day didn’t pass without Samsung’s landing joint venture partner in another unrelated area. Company announced it had signed “memorandum of terms” with Toshiba to combine their optical disc drive businesses, including CD-ROM and DVD-ROM operations, in which Samsung would hold 49% stake, Toshiba 51%.