Samsung Electronics held board of directors meeting on 25 and announced it concluded agreement on joint investment in 8-2 LCD line with Sony through a joint company ?S-LCD?.
The investment in 8-2 line will be total 1.795trillion and two companies agreed to share each half. With agreement, worries over cooperation between Samsung Electronics and Sony that surfaced when Sony decided to do joint investment on 10 generation LCD line with Sharp ended.
The agreement between two companies was expected. The decision on massive investment has been delayed due to special investigation. When Sony declared joint investment of 10 generation line with Sharp earlier this year, concerns about end of cooperation between Samsung and Sony were suggested. But this agreement ended worries.
The industry has focused on intention of Sony about 8-2 joint investment. To dominate world LCD TV market, Sony might conclude that smooth supply of panel is the key to success. Sony decided to make joint investment in 10 generation with Sharp but 10 generation line in Japan will be mass-operated as early as beginning of 2010.
To do marketing in world LCD TV market from this year, it has to have Samsung Electronics as panel supplier. Although there are Taiwan panel companies, because of lack of 8 generation line, large panel over 40 inch is in serious shortage. 8-2 line that will be invested with Samsung was optimized for 50 inch TV panel.
President Ahn, Hyun-seung of Displaysearch Korea said, ?For Sony, it was a necessary choice for panel supply. Although it decided to invest with Sharp in 10 generation, Samsung and Sharp are rivals of it in TV market so there is no need to relate decision of joint investment.?
Another issue is future relations between Samsung and Sony. As Sony decided to make joint investment with Sharp in 10 generation, there is little possibility for Sony to do investment with Samsung. However, the possibility can not be completely ignored. If large LCD TV market continues to grow exponentially, Sony will have no choice but Samsung when it can?t meet the demand with 10 generation production capacity of Sharp. Eventually, the relations between two companies will be up to Sony.
Especially, the factor that affects Sony?s decision is the trend of world LCD TV market in the end of this year. Sony lost first place to DM division of Samsung in LCD TV market and it might fail to accomplish sales goal and to narrow the gap with Samsung. If it blames aggressive marketing of DM of Samsung for its failure, relations between two companies will be worse. However, if there is problem in smooth panel supply, they will be closer.
President Ahn said, ?Since there are many variables, it is hard to predict which direction relations of two companies would go. Based on changes in world LCD TV market, Sony will make decision and relations will enter another phase.?
Last week, two companies agreed to do joint investment worth of 1.795trillion needed for expand 8-2 line in Tangjeong LCD through S-LCD, a joint firm of two companies. Each firm will invest half of amount to mass-produce and share 60,000 pieces of panel a month in the second quarter of next year.