SONY, SAMSUNG TO FORM LCD ALLIANCE
Sony and Samsung are said to have reached basic agreement on joint venture to produce so-called 7th-generation LCD panels. Samsung had said earlier it would spend $2 billion to establish 7th-generation production using 1.9x2.2 m glass substrates by 2005.
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Pending approval of Samsung board at meeting scheduled for today (Fri.), companies are expected to sign joint venture early next week, Japanese newspaper Nihon Keizai Shimbun reported. Venture would be capitalized at ?200 billion, based in S. Korea and headed by Samsung executive as CEO, newspaper reported. Construction of fabrication facility that would produce 7th- generation panels is expected to begin within year on land in central S. Korea that Samsung had acquired. Company has roughly 17% share of LCD TV market in U.S., analysts have said. Each company is expected to receive half of production, which is expected run at 100,000 units per month. One portion will be allocated for Samsung and Sony branded LCD TVs, while other goes to OEM customers. Sony and Samsung officials weren’t available for comment at our deadline Thurs.
Alliance would give Sony key production source for LCD panels as it sought to build on what analysts have said was 8% share of LCD TV market. It also would allow both companies to share costs of developing and producing 7th-generation panels. Sony, which was rumored in late Sept. (CED Sept 23 p1) to be seeking joint venture with Samsung, had said it would start its own production of LCDs by 2005. New venture also will give Sony direct source for panels rather than buying them from 3rd-party suppliers. Sony is purchasing 23W and 30W panels for LCD TVs from LG.Philips.
Sony/Samsung deal is likely to quicken pace at which industry moves to increase size of glass substrates from which panels are cut. Larger substrates enable bigger sizes and help drive down of cost of smaller panels because of increased yield. Samsung already is manufacturing panels on 5th-generation line that use 1.1x1.3 m substrates. Samsung’s competitors, including LG.Philips, are expected to shift to 6th-generation technology that uses 1.5x1.8 m glass next year. Maximum size on existing 5th-generation line is about 54W.
CE companies have moved to form alliances in effort to offset of costs of producing new display technologies. Most prominent of these is LG.Philips, which was created in 1999 as LCD joint venture LG Electronics and Philips. Sony itself invested $45 million in 2002 in NEC’s plasma display panel production facility, but only after pulling out of venture signed year earlier with Fujitsu-Hitachi joint venture. Sony was slow in entering LCD TV market, not introducing first models until this year as it sought to maximize sizeable investment it made in developing and manufacturing flat-screen Wega CRT tubes.