Sony is in talks to terminate its joint venture with Korean electronics giant Samsung to produce liquid crystal displays (LCD) for television sets as the Japanese company aims to reduce procurement costs and boost its loss-making TV business.
Japanese broadsheet The Mainichi Daily News reported on Sunday that Sony, which owns about half of the South Korea-based S-LCD Corporation that manufactures LCD TV displays, aims to sell its stake back to Samsung. The Japanese company hopes to reach an agreement with its Korean counterpart by the end of this year, according to sources close to the issue.
The move is aimed to help boost Sony's TV division, which is expected to be in deficit for the current fiscal year ending next March. This would also be the eighth straight year the department is in the red, the report noted.
Prices of LCDs have declined sharply as a result of decreasing demand for TVs in Japan due to the the nationwide transition to digital terrestrial broadcast, which is near completion, the Japanese news agency noted. The economic slowdown in the United States and Europe has not helped either, it added.
As such, Sony has been increasing its purchases of cheaper displays from Taiwanese and other manufacturers rather than focus on the joint venture. The news report also cited a senior company executive who said the joint venture "is one of the factors keeping its procurement costs high".
According to The Mainichi, Sony has invested 1.95 trillion won (US$1.7 billion) in S-LCD since it was established in 2004.
However, a separate report from Reuters on Sunday noted that such news seemed to be "distorted" because Sony had been negotiating with Samsung over its returns on investment in the joint venture, rather than selling up its shares.
"Under the contract on the LCD joint venture, the two parties are allowed to discuss such matters, which outsiders could misunderstand as a step for Sony to withdraw from the joint venture," the source, who spoke on condition of anonymity, told Reuters.
The news wire also stated the two companies cut capital in the joint venture by US$555 million as Sony sought to slash its TV losses and Samsung forged ahead with next-generation displays.
The Japanese electronics giant was changing lanes to focus on more lucrative markets such as smartphones. It announced on Oct. 27 that it was ending a 10-year mobile phone joint venture with Ericsson by buying out its business partner's 50 percent stake for 1.05 billion euros (US$1.47 billion).
"We can more rapidly and more widely offer consumers smartphones, laptops, tablets and televisions that seamlessly connect with one another and open up new worlds of online entertainment," said Sony Chief Executive Howard Stringer.