JAPAN/KOREA: Sony to quit LCD panel joint venture with Samsung

Samsung and Sony's joint-venture LCD panel operation is set to come to an end after seven years, as Sony seeks to become the latest Japanese company to get out of the TV panel manufacturing business.

S-LCD, which was founded in 2004, looks set to become wholly owned by Samsung, as Sony tries to find ways to turn around the losses in its TV division.

Sony originally entered into he partnership to ensure a reliable supply of LCD TV panels, and over a five-year period from its beginning is reported to have invested almost £1bn in the operation.

Based at Samsung's Chungcheongnam-do plant in Korea, S-LCD is owned by Sony and Samsung in a near-equal partnership, the Korean giant having a slight majority holding. Half of its output is supplied to Sony for use in its TVs.

However, with LCD panel prices falling, massive oversupply in the market and Sony's TV division still in the red, the Japanese company hopes to reach an agreement to terminate the joint venture by the end of this year.

As we reported earlier this year, both partners were looking to reduce the capitalisation of the operation; now it looks as if Samsung will either have to buy out the Sony share, or find a new buyer for the other half of the business.

In the current TV market, the latter course could be a tough one to follow.

Sony has recently cut back hard on its in-house production of components, as well as selling off some significant TV manufacturing facilities.

It will concentrate its efforts on product design, in an effort to head off any further increase in the losses made by its TV division, which this year posted its seventh annual operating loss, and has so far lost the company some £3.5bn.

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