Panasonic vs Sharp in TV panel production
Panasonic vs Sharp in TV panel production
Yasuhiro Takizawa / Yomiuri Shimbun Staff Writer
Domestic production of screens for flatscreen TVs has come down to two camps spearheaded by Panasonic Corp. and Sharp Corp.
But as these giants prepare to go toe-to-toe, the global financial meltdown has raised doubts about whether they will be able to rake in enough profits to cover their massive investments in new plants.
Panasonic will start operations at a 280 billion yen plasma display plant in Amagasaki, Hyogo Prefecture, in fiscal 2009, and ramp up annual production of 42-inch plasma panels at its factories to 23 million units, a 2.4-fold increase over current levels.
“The panels are our basic materials,” said Ken Morita, managing executive officer at Panasonic. “Producing them ourselves will quicken technological advances and help us produce TVs superior to our rivals.”
Sharp plans to start production in fiscal 2009 at a new plant in Sakai, Osaka Prefecture. Under an agreement with Sony Corp., two-thirds of the panels made at the plant will be used by Sharp, and the remainder by Sony.
For Sharp, the tie-up is expected to have the double advantage of trimming investment costs and securing a stable supply destination. Sony owns the second-largest share of the global market for flat-screen TVs.
Electronics maker Hitachi Ltd. no longer makes its own panels, deciding that it would do better to procure panels made by Panasonic.
“Panels are now becoming less and less of a factor for differentiating between products,” Hitachi President Kazuo Furukawa said. “We’ll take on our competitors through a combination of TV functions such as the quality of transmission and colors visible on the screens.”
Sharp has already supplied Pioneer Corp. with liquid crystal, and in fiscal 2009 Pioneer plans to procure plasma screens from Panasonic, which on Tuesday announced it had become the first TV maker in the world to have produced 300 million TVs.
Panasonic will plow about 580 billion yen into its new plants in Amagasaki and Himeji, Hyogo Prefecture. Sharp will spend about 380 billion yen on its Sakai plant. This comes at a time when international competition in panel production is growing fiercer.
“Prices are falling due to pressure from makers in Taiwan and South Korea,” an official of a major manufacturer said.
Because of this trend, the huge investments being made by Panasonic and Sharp may not be a sure bet, according to Katsuyuki Nakai, an analyst at credit rating agency Standard & Poor’s.
“The risks of investing in panel production are rising. [Panasonic and Sharp] will have to navigate changes in market conditions by reducing costs and building up their strength,” he said.
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