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Sony on Tuesday formally announced plans to set up a joint venture with Sharp in the next-generation LCD business. Sony currently has a panel-making venture with Samsung Electronics, but the Korean conglomerate is in hot water over a massive corruption scandal.
Sony's Tuesday announcement sent shockwaves through the industry, with observers saying it is as good as a divorce from Samsung rather than a plan to add Sharp as a supply source for panels to meet increasing demand for LCD TVs.
Sony agreed to invest in an LCD plant its rival is building in Sakai City, Osaka. Sharp will take a 66 percent stake and Sony 34 percent. No figures were disclosed, but given Sharp's earlier announcement that the total investment will be some 380 billion yen, Sony is expected to be investing more than 100 billion yen.
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This combo consisting of pictures taken on Oct. 2, 2007 shows Sharp (left) and Sony's large LCD TVs at their booths at the Ceatec electronics trade show in Chiba. Sony plans to invest more than US$925 million to jointly produce liquid crystal display for televisions with rival Sharp. /AFP
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Sony ranks second in the global LCD TV market with a 17.1 percent market share and Sharp third with 11.7 percent after Samsung¡¯s 18.7 percent. The Japanese business daily Nihon Keizai Shimbun said Sony is attempting ¡°to drive down the supply price of LCD panels by setting up a joint venture with Sharp in addition to its existing cooperation with Samsung, and to win top place in sales output by securing stable mass supplies of LCD panels."
Sharp agreed for the same reason and to reduce the risk of the massive investment.
The Sony-Sharp joint venture plant will begin production in 2009. It will be a 10th-generation factory capable of producing 5 million 40-inch LCD TV panels annually. Thus if demand for larger flat-panel TVs keeps growing around the world, Sharp is likely to replace Samsung as Sony's main partner in the field.
Samsung and Sony have produced LCD panels since 2003, when they jointly invested W2 trillion (US$1=W947) to set up S-LCD in Tangjeong, South Chungcheong Province.
If Samsung and Sony end their relationship in the long term, the global LCD TV market will be divided into two dominant groups -- a Japanese group consisting of Sony, Sharp and Toshiba and a Korean group led by Samsung and LG.
Matsushita, the current leader in the PDP market, is also planning to make a huge investment to advance into the LCD TV market.
(englishnews@chosun.com )
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