South Korea's Samsung Electronics said on Monday that Samsung and Japan's Sony
Such a union would make sense. While Sony is the premier global brand in consumer electronics, it is completely reliant on outside sources for LCD panels. On the other hand, Samsung is the world's second-largest supplier of LCDs. The joint venture would compete with LG Philips LCD -- a 50-50 joint venture between South Korea's LG Electronics and Netherlands' Philips -- for the No. 1 position in global market share.
The terms of a deal could possibly have Samsung handling management and production, with Sony managing marketing and finance.
The timing is right, as flat panels are all the rage these days. Replacement demand for LCD televisions alone is expected to increase from 1.7 million units last to year to 31.9 million units in 2007.
Rather than shoot electrons, flat panels use a flat, fixed grid of square of pixels to create digital images controlled at the pixel level. They are space efficient, lighter, and more aesthetically appealing than the bulkier CRT-based TVs and computer monitors that most Americans keep in their homes. Unlike CRT TVs, flat panels feature sharp picture quality at the edges and are unaffected by the magnets of unshielded speakers.
The current drawback is cost. But as plasma and LCD technology improves, cost reductions will come with it. Samsung alone is looking to invest $17 billion in cost-reducing production capability by 2010.
With the deal, Sony would get a steady supply line without having to build its own production facility, and it could give its electronics division a much-needed jolt. Samsung, which is also the world's largest producer of computer memory chips, would get a sure outlet for its LCD panels.
Jeff Hwang owns a Samsung cell phone.
