By Kim Yoo-chul
Staff reporter
Are Samsung Electronics and Sony friends or foes?
Although the competition between these technology giants clearly represents one of the planet's fiercest business rivalries, it also seems true that the complicated battlefields of the technology industry repeatedly pressure them to come together.
As the old saying goes, there are no permanent allies or enemies in business, and the Samsung-Sony relationship serves as a good example.
This has much do with Samsung’s dual strengths in both parts and finished products.
Samsung, the world's largest technology company, and Sony, which is desperate to regain its consumer electronics crown, are competing head-to-head in major markets such as flat-screen televisions and mobile devices.
However, Sony is also Samsung's biggest client for liquid crystal displays (LCDs), using the screens of its archrival to build its premium BRAVIA-branded televisions since 2004, a connection managed through a joint venture between the two companies called S-LCD.
However, Samsung's ties with Sony over LCDs have been souring in recent years, with Sony mixing in LCDs from LG Display, Samsung's bitter domestic rival, to decrease costs.
Samsung, which is maintaining a slight edge over LG Display as the world's largest LCD maker, didn't take this well, and even refused Sony's request to provide it with light emitting diode (LED)-related components intended for use in televisions and other consumer electronics products.
Samsung always had its excuses to snub Sony, most of them related to claims about tight supply, but it seemed obvious to industry watchers that the company took Sony's dabble with LG Display personally.
The relationship between Samsung and Sony hit a new low, when Sony, snubbing its old South Korean partner, chose its domestic rival Sharp as a collaborator to build a next-generation flat-screen plant in Japan.
But it now appears that Samsung will attempt to mend the fences. Samsung chairman Lee Kun-hee and Sony boss Howard Stringer had a lengthy talk in Seoul that lasted for nearly three hours in Seoul Monday, and although Samsung representatives declined to reveal what was discussed, it seems apparent the Lee is intent on renewing the relationship with Sony.
"The executives of the two companies didn't discuss LCD-related business, and it was just a casual dinner meeting," a spokesman told reporters.
"The meeting continued for about two-and-a-half hours from 6:30 p.m. at our chairman's private guest house in northern Seoul. Chief executive Choi Gee-sung and chief operating officer Lee Jae-yong (chairman Lee's son) attended the meeting along with Sony executive deputy president Hiroshi Yoshioka," he said, adding that Stringer returned to Japan Tuesday morning.
His Seoul trip came at a time when S-LCD, based in Tangjeong, South Chungcheong Province, marked its sixth anniversary.
Some industry watchers had speculated that the Sony CEO will request an increase in LCD panel supply and discuss collaboration in other business areas, such as three-dimensional (3D) image technology.
Perhaps, Samsung can ill-afford to let its partnership with Sony deteriorate, when it is desperate to build a content network to drive the sales of 3D-enabled TVs, which are considered the natural successor to today's high-definition (HD) flat-screen televisions.
And Sony happens to be a major 3D player both on the technology and content side.
Samsung is also under pressure to secure distribution channels for its new businesses, including solar cells, and this is also where cooperation with Sony could help.
And the key to a better relationship would be ensuring stable supplies of LCDs to Sony, which is desperate to see profit from its television business for the first time in seven years.
Sony plans to boost its BRAVIA television sales by 25 million this year and through March 2011, which would be a 60 percent growth.
Global shipments of LCD televisions soared 50 percent in the first quarter to reach 40.6 million from a year ago. But Sony's global share retreated by 9.2 percent, trailing Samsung’s 18.3 percent and LG Electronics’ 12.7 percent, market research firm DisplaySearch said.
"Stringer's visit came at a good time. Sony will push its LCD business with Samsung as scheduled, while Samsung will get more chances to acquire Sony's proven content know-how," a senior Samsung executive told The Korea Times.