Folks who think price competition is starting to heat up amongst LCD manufacturers might be well-advised to sit back and wait a few years. Just a day after Sony announced a deal with rival Sharp to buy a one-third stake in Sharp’s new $3.5 billion LCD manufacturing facility, reports have Sony and Samsung getting together to build a separate LCD manufacturing facility of their own.
The companies already have a joint venture—S-LCD—that manufactures 60,000 7th-generation LCD display panels a month in a facility near Seoul. Those panels are used in both Sony and Samsung LCD televisions. The new plant would also be located in South Korea, and produce 8th generation panels. Sony’s deal with Sharp gives it a foothold in 10th generation panels, which have greater yields than either 7th or 8th generation lines.
Sony is looking to diversify its supply of LCD panels as it ramps up LCD sales: the company is on track to sell 10 million LCD TVs for its business year ending March 31, and wants to sell 15 to 20 million next year. But Samsung is currently ranked as the largest LCD TV manufacturer, followed by Sony and Sharp.
Creation of new production lines may be good news for consumers, as price pressure will make ever-larger and fully-featured televisions available at lower costs. But a glut of panels may actually be bad news for the manufacturer, who face substantial costs to bring manufacturing facilities online. Partnerships among the major TV makers let the companies share the costs (and risks) of building LCD fabrication facilities, but also mean the partners are more likely to be at each other’s throats in 2009 and 2010 as panels from the new plants hit the market.
