TOKYO: Struggling Japanese electronics giants Sony and Panasonic said on Monday (25 June 2012) they would team up to develop televisions with advanced technology, in a bid to claw back market share from overseas rivals.
Despite a long-standing rivalry, the firms said they would aim to establish mass-production technology for organic light-emitting diode (OLED) television panels next year, as they try to recover from multi-billion-dollar losses.
The technology lets producers make TVs that consume less power while offering a sharper picture than conventional flat panels, and is expected to be one of the dominant technologies in next-generation televisions.
However, the industry has struggled to find an economical way to develop larger screens equipped with the technology. The partnership marks the first time the two firms have teamed up in a core business, a major turning point for Japan's hard-hit electronics industry.
"Each company plans to utilise its own strengths to develop and commercialise its own competitive, high-performance, next-generation OLED televisions and large-sized displays," the firms said in a joint statement.
The move comes as South Korean rivals Samsung Electronics and LG Electronics reportedly plan to separately release 55-inch (140 centimetre) televisions with the advanced OLED technology this year. But Mitsushige Akino, analyst at Ichiyoshi Investment Management in Tokyo, cast doubt on the Sony-Panasonic deal, saying it is too late.
"They should have done such a deal five or six years ago," he told AFP. "The two companies need more drastic measures such as a withdrawal from the TV business altogether. This won't change their severe business circumstances."
In a research note, Fitch Ratings analyst Alvin Lim said similar tie-ups may be in the offing for Japan's electronics giants, but he added that South Korean firms were "way ahead" in developing OLED technology. "Such tie-ups between fierce competitors in the TV segment were once unthinkable, (but) they are now necessary to claw back the technological and market leadership ceded to Korean manufacturers," said Lim, associate director in Fitch's telecommunications, media and technology team.
But he added that "Japanese OLED investment is better late than never". "While consumer demand for OLED is still unproven, without investment Japanese manufacturers could become stranded in the TV market should this technology become mainstream."
Sony and Panasonic lost more than $15.0 billion combined in the year to March owing to falling sales and intensifying competition. The losses have been particularly acute in the television business, where Japanese firms have been hurt by a strong yen, shrinking profit margins and stiff competition from foreign rivals.
Earlier this month Sony shares tumbled below 1,000 yen for the first time since 1980 and the era of the Walkman, sending the value of the company crashing to less than a tenth of what it was just over a decade ago. In April, Sony said it would cut about 10,000 jobs and spend nearly $1.0 billion on an overhaul that its new chief Kazuo Hirai described as "urgent".
Sony has vowed a return to the black after losing 456.66 billion yen ($5.7 billion) in the year to March, forecasting a net profit of 30 billion yen in the current fiscal year through March 2013. Panasonic also projected it would return to profitability in the current fiscal year with net earnings of 50 billion yen, after posting a record 772.2 billion yen shortfall in its latest financial year.
In Tokyo trade on Monday, Sony closed down 2.4 percent at 1,135 yen, while Panasonic rose 0.63 percent to 632 yen, with the announcement coming after markets closed.
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