LG Chem strikes deal with Sharp

By Kim Yoo-chul

Korea’s LG Chem is going to sign an agreement with Sharp to export patented films for use in 3D screens in what analysts see as a milestone for the Korean company, said an executive from LG Electronics

``The agreement calls for LG Chem to supply its films for use in large 3D TVs by Japan’s Sharp over the next five years and we expect the amount of shipments to gradually increase,’’ said a high-ranking LG executive, Wednesday.

The executive directly involved with the deal declined to unveil further contract details. Sharp officials in Korea weren’t available for comment.

``The deal is more about cost-effectivity for LG Chem as it approached Sharp to sell its 3D film technology at a beneficial price, which I mean is a discount from earlier offers,’’ the executive said, expecting the latest deal will help LG Chem further expand its customer base for 3D films.

The firm’s cheaper film-based 3D technology, dubbed FPR 3D, has been receiving more responses from Japanese TV majors.

Sony and Panasonic, once supported the Samsung-led battery-powered 3D glasses technology, but released their strategic 3D televisions using LG’s FPR 3D system.

``Sharp’s decision to use LG’s 3D films could be a cue for LG because LG wants to expand its global share for 3D TVs. We think the groundwork has been laid. We need big promotions,’’ said another LG executive, asking not to be identified.

The rare support by the top three Japanese TV makers for LG’s technology isn’t surprising. The strength of the Japanese yen is proving almost as devastating to the country’s industry as the ongoing after-effects of the earthquake and tsunami it experienced just over a year ago.

Items made in Japan are expensive in just about every export market, manufacturers are looking at ways of moving production and component sourcing offshore to save costs and some are even considering reducing parts of their business they suspect will struggle to make a profit in the foreseeable future.

``It’s all about cutting costs. Therefore, it’s no surprise that LG Chem has sealed an agreement with Sharp because it’s all about cutting costs of 3D screens for use in 3D TVs,’’ said the LG executive.

Sharp has also scaled back its TV panel production in favor of more profitable smartphone and tablet displays.

LG Electronics has made a separate deal with Sharp to use its 60-inch LCD screens in an attempt to manufacture FPR 3D TVs with better pricing.

``In return for using LG’s 3D films for Sharp’s 3D TVs, Sharp will export its large-sized flat-screens to LG Electronics. This is also a win-win deal,’’ said the LG executive, adding Sharp has offered good prices to LG Electronics.

LG Electronics will release a 60-inch 3D TV using Sharp’s flat screens, according to the executive. Yoon Won-il, a spokesman for LG Electronics, declined to confirm this.

``The strengthening LG-Sharp partnership doesn’t mean LG Electronics is seeing a deterioration in the tie-up with LG Display as the deal is a part of LG’s cost-cutting efforts,’’ said the LG executive.

LG Electronics reaped a record operating profit of 6.3 percent from its television business during the first quarter of this year, according to LG officials.