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Sony-Sharp JV puts Samsung on red alert

Posted: 28 Feb 2008 ?? ?Print Version ?Bookmark and Share

Keywords:10G LCD plant? Sony-Sharp JV? LCD TV market?

Sony Corp.'s announcement that it will form a joint venture with Sharp Corp. to produce and sell large-sized LCD panels and modules has put long-time LCD partner Samsung Electronics on red alert.

The new JV will seek to maximize the advantages gained from using the 10G glass substrates to produce large-sized LCD panels and modules.

With the Japanese companies' new JV underway, the Chosun Ilbo reported that the South Korean company may suffer inevitable losses.

Sony and Samsung established a LCD panel joint venture in 2003, named S-LCD Corp. The Sony-Samsung JV built new plants in 2004 and 2006, with Sony investing some $1 billion to $1.38 billion each time. With the latest developments, Samsung may solely invest in S-LCD's 10G production line, which is estimated to cost $5.3 billion to build.

S-LCD's 10G production, when put into operation, is expected to bring annual sales of $4.25 billion, of which Sony was expected to buy half. With Sony's 10G tie-up with Sharp, Samsung may even lose its biggest buyer. Since its JV with Samsung, Sony bought around $2.12 to $3.19 billion worth of LCD panels annually from S-LCD.

Another concern for Samsung is the possible damage to its brand image. Upon the establishment of S-LCD in 2003, Samsung consolidated its high-tech image by supplying LCD panels to Sony, then the world's largest digital TV maker. The move helped Samsung to eventually take the top spot in the global LCD TV market.

The new alliances among the Japanese companies have also sparked initiatives to call for closer cooperation among Korean enterprises. Several companies, led by the Korea Display Industry Association, have showed plans to collaborate to develop display panels, equipment, parts and materials.

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