BenQ, Samsung and Sharp are set to manufacture flat panel TV’s for LG Electronics. The news comes following a massive restructuring of LG’s floundering flat panel TV operations.
BenQ has snared a major deal to manufacture LG Electronics LCD TVs. The move comes as LG initiates a massive restructuring of its display division. The company will directly produce and sell only high value-added liquid crystal display TVs larger than 30 inches. Small- and mid-sized TVs will be sourced from outside manufacturers and sold under the LG brand.
Also set to snare LG TV contracts are Samsung and Sharp.
Yoon Byung-do, the chief of LG Electronics said that the LG Electronics’ plants will stop production of unprofitable models smaller than 30 inches and instead focus on manufacturing high value-added larger LCD TVs.
An LG Electronics official said that BenQ of Taiwan will produce small- and mid-sized TVs smaller than 26 inches and the company is looking for other manufacturers to build small models.
LG will also buy liquid crystal display panels from its archival Samsung and Sharp as a battle looms in the over 50-inch TV segment. “We asked Samsung Electronics to supply LCD panels to us,” digital display head Kang Shin-ik told reporters at the consumer electronics trade fair IFA 2007, in Berlin.
Kang warned that only three or four brands will stay alive in the global TV market by 2010 and hoped to face off with Samsung and Sony after increasing its market share to 15 percent from the current 10 percent.
Industry sources said the European digital TV market is expected to reach between 33 million and 35 million units in 2008 from 26 million this year. Data from DisplaySearch also shows global LCD TV sales rose 28 percent to $14.4 billion in the second quarter from a year ago, while plasma TV sales plunged almost 30 percent to $3.4 billion.
Market analysts say LG’s weak brand power in digital media products, including LCD TVs, is pressuring the company to take immediate measures to compete with its global rivals.
“Unlike the home appliances sector in which the company has a good performance, LG’s digital media division seems to be struggling to narrow the gap with Samsung and Sony,” says Kim Gee-soo, a senior analyst from Good Morning Shinhan Securities.
LG Philips LCD, LG Electronics’ television business in a joint venture with Dutch group Philips, is likely to install eighth-generation production equipment at a new plant in the third quarter of 2008, using the same 8G substrate size as the Samsung-Sony partnership, according to a source from the company.
Last week, Samsung and Sony formed a joint venture for the shipping of the new eighth-generation LCD panels. The partners are set to begin churning out 50,000 panels – mainly used to make 52-inch full HDTVs – a month by the end of the year.
Analysts say plasma display panel (PDP) technology, currently better-suited for bigger flat TV panels, will eventually lose out to LCD technology as large LCD screens have become much cheaper to produce.