Japan: losses on LCD continue

Despite restructuring, outsourcing, joint ventures, mergers and even forays into 3D LCD displays continue to lose money for Japanese electronics companies. That may not change anytime soon.
While dem…

Despite restructuring, outsourcing, joint ventures, mergers and even forays into 3D LCD displays continue to lose money for Japanese electronics companies. That may not change anytime soon. While demand is strong for the small and mid-size panels used in smartphones and tablet PCs, the price for the displays used in televisions and the TV sets continues to decline more than 20% a year. That has led to losses of USD 6 billion over the past seven years at Sony“s LCD unit. SMBC Nikko forecasts the electronics conglomerate to lose another USD 1.1 billion over the next two years. That is equivalent to almost half of the operating profit that all of Sony forecasts for the fiscal year started in April. Last week, Sharp, which generates a majority of its revenue from finished TV sets and LCDs, said that it would restructure its LCD panel unit and outsource some production. That includes getting out of commoditized TV panels of 40 inches or less and converting some production to smaller displays for products like Apple“s iPhone and iPad. But with others also moving into that profitable segment, it could soon face the same oversupply problems plaguing the TV market. Adding to its woes, Sharp is heavily reliant on the saturated Japanese TV market, which has been disrupted by the March earthquake. Panasonic is mainly reliant on domestic manufacturing, leaving it at the mercy of currency swings for its rising exports. Due to these worsening market conditions, Sony and Toshiba have begun taking steps to combine their small and mid-size panel businesses into a third-party fund with government involvement, allowing them to reduce their losses while keeping minority stakes to ensure supply.