Uneasy Samsung, LG
Korean tech giants welcome Sony’s new restructuring plans
By Kim Yoo-chul
Samsung and LG Electronics have shown mixed feelings over the current business troubles of Japan’s Sony.
Because the Tokyo-based Sony is still one of the top partners for the Korean companies, which buys ``billions of dollars worth’’ of components, the firms are closely monitoring any possible impact of Sony’s drastic restructuring plans of its key businesses.
``Well, we aren’t entirely happy to see the ongoing troubles about Sony’s hardware-focused businesses, as Sony is still one of our top clients. Samsung wants Sony to recover soon,’’ said a high-ranking Samsung executive, asking not to be identified.
Until 2010, Sony was Samsung’s top client but Apple emerged as Samsung’s biggest customer from last year. In 2010, Sony bought some $5.3 billion worth of parts, according to Samsung Electronics.
Samsung was selling flat-screens and memory chips such as advanced mobile DRAMs and NAND flashes for use in Sony’s BRAVIA-branded televisions and smartphones.
``As Samsung has been making money by selling our parts to clients, business struggles of our competitors aren’t good. We have mixed feelings about Sony,’’ the executive stressed.
In terms of market value, Samsung is 10 times greater than Sony, while Apple, is 30 times larger than the Japanese firm, according to market research firms.
As part of a desperate restructuring plan, Sony has terminated its long-time partnership with Samsung in its flat-screen joint venture that had been maintained since 2004.
Sony’s decision sounds reasonable for itself, however, it was also a blow to Samsung, which lost a stable customer for flat-screens.
``That’s why Samsung has higher hopes for the new Sony CEO Kazuo Hirai’s business strategy to revive its electronics business. If Sony does well, then that’s a good for Samsung, too,’’ said another Samsung executive.
The situation isn’t much different for LG Electronics and its flat-screen affiliate LG Display, as Sony has emerged as a ``big help’’ to push LG’s in-house film patterned retarder (FPR) 3D technology.
Ties between LG and Sony are stronger as Sony is releasing more of its 3D TV sets equipped with the LG solution in key markets such as China.
LG Display has been boosting its shipments of FPR 3D screens to Sony as the cash-strapped Japanese TV maker is relying on the technology, departing from its previous dependence on Samsung’s battery-powered 3D technology.
``While Panasonic and Sony had been strong advocates for Samsung’s battery-powered 3D technology, their ailing TV businesses are forcing both companies to adopt the cheaper FPR 3D solution from LG. For LG, Sony’s recovery is vital to further proliferate its 3D solutions,’’ said a high-ranking official.
Sony’s production of more 3D TVs using the LG solution is ``significant’’ as Japanese TV makers account for over 30 percent of global 3D demand, according to LG. ``We will find ways to help Sony,’’ said the unnamed official.
The FPR 3D technology developed by LG uses inexpensive 3D glasses and delivers flicker-free, as well as brighter 3D visuals. However, the drawbacks include narrower horizontal viewing angles and visible black scan lines at shorter viewing distances.
``Anyhow, We are not happy about Sony’s struggles and we welcome Hirai’s attempts to turnaround its TV business,’’ he said.
Hirai said he was committed to strengthening the company's mainstay electronics business ― which includes digital cameras, games and smartphones ― by concentrating investment and technological development in this division.
Sony aims to boost its share of overall company sales to 70 percent annually through March 2015 from the current 60 percent.
Through cutting fixed and operating costs, Sony will make its TV business, which has lost money for eight straight years, profitable again by the fiscal year through March 2014.
``The consumer electronics industry is growing via fierce competition as followers are trying to catch up with leaders by releasing advanced products. Samsung Electronics was late in smartphones, however, Samsung is now the sole competitor with Apple in smartphones and tablets after the Korean company experienced setbacks from the iPhone shock,’’ said Lim Dol-yi, an analyst at Solomon Investment.
Samsung said it expects to earn 5.8 trillion won in the first quarter of the year as operating profit. Some 70 percent of this was from Samsung’s smartphone business.
``By competing with each other, markets for smartphones and tablets expanded. If Sony makes a comeback earlier than expected, then that’s also good for Samsung and LG,’’ Lim said.