Samsung, Sony in a joint venture for flat panel TVs

Samsung, Sony in a joint venture for flat panel TVs

South Korean electronics giant Samsung and Japanese powerhouse Sony have entered into a joint venture to manufacture liquid crystal display panels. The production segment of the JV would be wholly supervised by Samsung Electronics Co. Ltd.

Sony has invested $1 billion in the JV that has been labeled S-LCD and has but a minuscule presence on the plant. Analysts agree that these people are mainly co-coordinators and have little to do on the plant per se. Sony is now dependent on Samsung to furnish the liquid-crystal display panels for its various products.

Since Sony does not have its own LCD plants, it has had to rely on Samsung to enable it to meet the surging demand for the product. Both companies have agreed to invest $84 million to boost the production to 75,000 panels at the S-LCD Corp by July next year.

The companies, which were cut-throat rivals till the other day, present contrasting pictures. Sony is perceived as an ageing powerhouse, while Samsung is seen as the upcoming young stud. Samsung has made it to the top because of what is called a "focused business strategy", meaning that the company has been able to cash in by being at the right place on the right time.

The fact that it manufacturers its own liquid crystal displays give Samsung a huge advantage in the electronics market since the demand for flat-panel television sets is expected to boom over the next couple of years.

On the other side, Sony Corp.'s sales have plummeted in recent times and have been seriously dented by the advent of Apple's iPod music player. The company has also not been able to meet the demand for flat-panel TVs. Although the PlayStation games console continues to ring in cash for the company, other segments have fallen way behind.

Acknowledging that Samsung had the backing of a quick decision-making management, Keiji Nakazawa, an S-LCD CFO and Sony Executive said, "Samsung has speedy decision-making and it acts very quickly. This applies to all Japanese companies, not only to Sony, but everything is fully considered to create a detailed business plan first."