Sony will sell its shares in the LCD panel joint-venture S-LCD to partner Samsung

Sony will sell its shares in the LCD panel joint-venture S-LCD to partner Samsung, the two companies have announced, in a deal worth $940m, as the Japanese firm struggles to coax profit out of its TV line. S-LCD Corporation had been established in 2004 by Sony and Samsung, with this new deal – that will leave S-LCD a wholly owned Samsung subsidiary – expected to close by the end of January 2012.

Sony will continue to source displays for some of its TVs from S-LCD. As for Samsung, it “anticipates heightened flexibility, speed and efficiency in both panel production and business operations.” Both those factors proved unreliable, leaving Sony with a wasteful production setup. The company announced plans to divide the LCD business into three, one section handling the legacy LCD TV business (using Sony-designed and produced components), another the ODM business (using third-party components) and finally a group that would be responsible for “developing and designing the next generation TV.”

Japan’s Sony and South Korean rival Samsung are dissolving their joint venture in liquid crystal display panels as Sony tries to stanch years of losses in its TV business. Samsung Electronics Co. will buy all of Sony’s shares in the joint venture for about 1.08 trillion Korean won ($935 million) subject to a final agreement, Sony Corp. said Monday. Samsung Electronics Co. will buy all of Sony’s shares in the joint venture for about 1.08 trillion Korean won ($935 million) subject to a final agreement Sony Corp. said Monday Dec. 26, 2011. The joint venture called S-LCD was set up in 2004.

The joint venture called S-LCD was set up in 2004. Sony, which fell behind in flat panel TVs, invested in a Samsung panel factory to ensure a steady supply of panels for its LCD TVs. Sony’s TV operation has lost money for seven straight years and the company is straining to return that key business to profit, Sony, which makes Bravia TV sets, does not make its own LCD panels. The only other LCD panels Sony manufactures are at its joint venture with Sharp, in which Sony owns a 7 percent stake. Cutthroat competition in a peaking market is squeezing margins for TV manufacturers, especially Sony, which analysts have long criticized for high production costs.

Sony “aims to secure a flexible and steady supply of LCD panels from Samsung, based on market prices and without the responsibility and costs of operating a manufacturing facility,” it said in the statement.--Meanwhile, Samsung Electronics, the world leader in flat-panel TVs, would have freer rein in producing its next-generation displays by taking control of S-LCD. In the face of total defeat in TVs, Sony looked to Samsung to reverse its flagging fortunes, forging a series of deals, including the $2 billion state-of-the-art LCD joint venture in South Korea. The South Korean manufacturer has now taken over from Sony as the consumer electronics king.