For financial reasons, Sony will increase the percentage of LCD TV panels procured from Taiwanese manufacturers from the current level of 30% to a quite alarming 50%, according to Japanese national newspaper Yomiuri Shimbun. This means that in the near future, half of the LCD panels installed on Sony Bravia HDTV displays will have come from factories in Taiwan.
Sony officials cited the Japanese yen’s continual strength (which eroded profits from exports) and the worldwide economic malaise (which affected TV sales) as two key factors that forced the company into making the decision. Aggressive cost-cutting was necessary to keep Sony’s TV operations – which had already seen its sixth consecutive years of losses in 2010 – alive, and since LCD panels constitute around 70% of an LCD TV’s manufacturing costs, securing LCD panels at a cheaper price is seen as the most effective strategy to boost the company’s bottom line.
Going along the same line of thought, Sony has also decided against investing further capital into Sharp’s Sakai LCD plant which was originally meant to be a joint collaboration between the two Japanese television makers to produce high-quality LCD panels. Under the agreement reached in July 2009, Sony is supposed to increase its stake in the LCD panel factory from the existing level of 7% to a maximum of 34% by the end of April 2011, but that will not happen now due to rechanneling of funds.
Sony will instead seek to purchase more Taiwan-made LCD TV panels at competitive prices to be fitted onto its Bravia range of LCD HDTVs. Taiwanese manufacturers Wistron and Foxconn International – both OEM partners of Sony who have previously made LCD TVs for the company – are expected to be the main beneficiaries from Sony’s outsourcing push.
One thing’s for sure: from now on there is going to be a rise in incidents of “panel lottery” – where separate samples of the same HDTV model may exhibit a variation in picture quality due to different LCD panels used – when it comes to buying Sony LCD televisions. The average consumers may complain that the Sony HDTVs they bought do not perform as well as the reviews say they should, while the more knowledgeable and proactive enthusiasts will probably try their best to obtain a set with the “right” LCD panel.