By Kim Yoo-chul
Samsung Electronics is ending its alliance with Japan’s Sony on their joint LCD venture, after the Tokyo-based firm has consistently suffered from massive operating losses from its TV business.
``Samsung has agreed with Sony to buy its entire stake in the S-LCD joint venture for 1.08 trillion won,’’ Samsung spokesman Song Cheol-gyu said Monday.
Since April 2004, Samsung and Sony have been operating two LCD-making facilities at Samsung’s manufacturing complex in Tangjeong, South Chungcheong Province. Sony holds a 50-percent stake in S-LCD in an attempt to secure stable supplies of the key parts.
S-LCD generated 11.37 trillion won in revenue last year and the joint venture was mainly producing 40-inch LCDs for Samsung’s PAVV and Sony’s BRAVIA TVs.
``The termination of the venture comes two months after Sony officially requested to end the partnership in October,’’ Song said.
The separation comes after Sony’s November announcement of a $2.2 billion annual loss in its TV division due to poor demand and a stronger yen.
Sony chief executive Howard Stringer said the company will implement contingency plans to revive its stalling momentum in TVs after the Japanese firm reported operating losses for seven straight quarters.
Sony, which reduced its TV-making plants to four from nine, is expanding its outsourcing to Taiwanese makers.
The once TV titan is to spend $1.47 billion to acquire the entire stake of Sony-Ericsson as a strategy to strengthen its smartphone business, urging top Sony decision makers to sell their stakes in the joint venture.
``Sony’s TV business could not produce profits anymore. We need breakthroughs. The termination is Sony’s strategic decision,’’ said a Sony official in South Korea.
Despite the breakup, Samsung Electronics plans to maintain a strategic partnership with Sony in next-generation TVs such as those that use organic light-emitting diodes (OLED) as a backlight, according to the Samsung spokesman.
``Samsung has struck another long-term LCD supplement deal with Sony and that means it will remain as a strategic partners despite the termination,’’ Song added.
Samsung is to supply large and medium-sized panels for televisions to Sony for a while, though Song declined to unveil further details citing the sensitivity of the issue.
``Samsung will convert the venture as a new line to produce more flat screens for tablets, smartphones and even OLEDs,’’ said a high-ranking Samsung executive without elaborating further.
In October, Samsung’s new control tower head Kim Soon-taek declined to comment when asked by The Korea Times about this possibility, while Samsung Electronics chief operating officer (COO) Lee Jae-yong gave a slight smile as his answer to the termination agreement.