Sony Gradually Allows Contract Assemblers to Purchase TV Panels

After separation from Samsung of Korea, Sony of Japan has decided to expand its panel supplier group, and is gradually authorizing contract assemblers to procure panels, according Chinese-language economic daily newspaper Economic Daily News (EDN).

About one-fourth of Sony's needed TV panels will be purchased by major contract LCD TV assemblers as Taiwan-based Hon Hai, TPV Technology Ltd., and Wistron Corp.

The top-two thin film transistor-liquid crystal display (TFT-LCD) panel manufacturers in Taiwan, Chimei Innolux Corp. (CMI) and AU Optronics Corp. (AUO), are expected to benefit from Sony's policy change by being major partners with Taiwan-based contract assemblers. AUO and CMI are expected to supply about 30% or five to six million units of Sony's needed TV panels.

Sony's LCD TV business has been in the red for seven years and has decided to withdraw investments in the S-LCDS-LCD Corp., a 50-50 joint venture established in 2004 between Samsung of South Korea and Sony.

Sony has procured for years some 70%-80% of needed TV panels from S-LCD and Samsung, but the percentage is expected to decrease to about 60% this year.

Industry sources say that Sony's overall TV demand this year is about 16.8 million units, including some 10 million units supplied by Samsung, as well as about 4.5 million and 1.1 million units by CMI and AUO, respectively.

A senior research manager at WitsView Technology Corp., a LCD market research firm, says that panel prices negotiated by Sony in the past are not necessarily better than that by contract assemblers, so increasing outsourcing of TV assembly and panels should enhance Sony's cost competitiveness. Also, he added, contract assemblers, rather than Sony, have to pay for panels, which will ease Sony's cash burden. Plus contract assemblers' panel purchases will build up bigger, steady supply to help stabilize panel suppliers' shipment volumes.

source & copyright: CENS