As the volatile liquid crystal display (LCD) industry continues to restructure after the global slump, Sony and Toshiba said on March 31 they were selling LCD plants to rivals. With high competition and falling prices forcing a reevaluation of the LCD business, the companies unveiled plans to sell factories producing panels for mobile phones, digital cameras and laptops in a bid to smooth earnings.
Sony Mobile Display is to sell a Japanese LCD display factory -- five years after buying it -- to manufacturer Kyocera at a loss in a bid to eventually boost profits by investing in cheaper technologies. Sony will sell the plant in Yasu, Western Japan, to Kyocera, with existing employment contracts assigned to Kyocera and employees transferred June 1, when the takeover commences.
Meanwhile, Toshiba subsidiary Toshiba Mobile Display said it had reached an agreement to sell a Singapore plant producing LCD panels for laptop displays to AU Optronics Corp. The plant is Toshiba's only LCD panel factory outside of Japan, so it will discontinue overseas panel production after the sale is finalized in July.
Financial terms for both deals were not disclosed.
Toshiba expects to be mired in the red for this fiscal year after it incurred its biggest-ever loss of 343.6 billion yen in the previous 12 months.
However, Sony said it had incurred a "loss on the fixed assets" as a result of the transaction with Kyocera. Sony bought the factory in 2005 for 118.5 billion yen (US$200 million)from Taiwan's Chi Mei Optoelectronics.
The maker of PlayStation game consoles, Bravia televisions and Cyber-shot cameras added that it did not expect the transaction to impact its February forecast of a 70 billion yen loss for the year. The electronics giant has been forced to undergo major restructuring -- slashing jobs, selling facilities and turning to suppliers for parts -- after seeing losses pile up due to evaporating demand amid the financial crisis.
Sony said the Kyocera deal would not affect its planned acquisition of "certain business assets" of Seiko Epson's LCD operations at its Tottori plant, also in Western Japan, due to be completed on April 1. The deal, announced last year, would see Sony acquire technology to make cheaper and lower quality "amorphous silicon" LCD screens compared to those produced at the plant which is to be sold to Kyocera.
The move towards cheaper LCD displays will also raise further questions about Sony's commitment to another display technology which uses organic materials. In February the Japanese giant said it would halt domestic shipments of organic light emitting diode (OLED) TVs by the end of March, which use less power and offer brighter images and wider viewing angles. Sony was the first company in the world to commercially launch a television using the expensive technology in 2007, but the OLED TV has seen sluggish demand with a price tag of about 200,000 yen (US$2,150.)
Toshiba meanwhile expects to be mired in the red for this fiscal year after it incurred its biggest-ever loss of 343.6 billion yen in the previous 12 months.
Copyright Agence France-Presse, 2010
