Despite strong denial by Samsung Electronics over its strategic tie-up with Sony in the liquid crystal display (LCD) business, the South Korean electronics giant is facing a crisis under an aggressive attack from Japanese rivals.
On Monday, Samsung clarified that the company will continue its strategic partnership with Sony and sees no problem with ongoing talks with the Japanese panel manufacturer to jointly invest in the second phase of eighth generation LCDs in Tangjeong, South Chungcheong Province.
“For now, we don’t have any plans to cut our partnership with Sony. Sony still buys some 50 percent of its LCD panel demand through a joint venture with Samsung,’’ Lee Sang-wan, chief of Samsung Electronics LCD business, told The Korea Times on the sidelines of a Korea Display Industry Association meeting held in southern Seoul.
“I am positive about the ongoing talks with Sony over the Japanese players’ possible involvement in the second phase of eighth generation LCDs,” he added.
Samsung Electronics and Sony established the joint LCD maker S-LCD in the South Korean province with an investment of 2 trillion won in 2003. The two have been enjoying a honeymoon phase since then, with Samsung buying half of S-LCD’s output and Sony the other half.
Lee’s comment comes after Sony reportedly said it is inclined to buy television LCD panels from its local rival Sharp starting as early as this year in a bid to diversify its procurement channels to meet rising demand and cost cuts.
Sharp will provide the latest 10th generation panels to produce highly-competitive 40 inch level displays that will be produced at its plant in Sakai, Osaka prefecture, which is slated to start operating this year.
Like Sony, Japanese manufacturers are busy shying away from their vertical integration strategies to succeed in the global sales battle and to regain their past glory in the global LCD market.
Despite undeniable strong edges in original technologies, Japanese players have failed to maintain their dominant positions in the segment mainly because of a passive attitude towards massive investments unlike Samsung Electronics.
Panasonic, which has recently announced a plan to build a new manufacturing plant for LCD panels in Hyogo prefecture to curtail a plasma display-centered business, has been strengthening a three-way partnership with Hitachi and Canon.
Experts and industry sources say the fight among the world’s leading LCD TV makers has entered the second round with the panel procurement deals between Japanese firms now in place amid management vacuum in Samsung Electronics _ the world’s No. 1 LCD maker.
Top executives of Samsung Electronics are currently busy soothing investors’ worries over the deepening Samsung Group-involved bribery scandal. The group’s key flagship unit has postponed holding several strategic meetings to finalize its detailed investment plans for this year.
“Japanese rivals believe this is a good chance to surge ahead of Samsung in the sector,’’ a Samsung official said.
“Possibilities have risen to buy LCD panels from Samsung Electronics or the opposite,’’ an official from the LG.Philips LCD added.
A recent data from DisplaySearch, a market-research firm, has shown that Sony overtook Samsung Electronics as the world’s biggest manufacturer of LCD televisions with 19.5 percent of the global market share in the fourth quarter, while Samsung followed with 19.3 percent in the same period. Sharp was surveyed as No. 4 with some 10 percent of share.
According to industry estimates, global demand for LCD TVs will reach 155 million units in five years, up from 74.8 million in 2007, driven by strong sales in China and the United States.
By Kim Yoo-chul
As reported in Korea Times