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Pioneer Electronics which is reeling from poor plasma sales has decided to stop producing 42″ plasma screens. Instead it will buy panels from arch competitor Panasonic, and Hitachi which last month pulled out of the Australian market.

Pioneer is also asking NEC to buy back a plasma plant it bought from NEC 3 years ago for $400 million.

The company that is credited with delivering the best TV in the world will now focus on 50″ or larger panels.

Last month research company DisplaySearch reported that Pioneer had witnessed a 39% decline in plasma sales Vs 62% growth in the overall plasma market during the last two quarters.

According to Reuters it would be Pioneer’s latest step away from a vertically integrated business model, in which manufacturers conduct production of key parts as well as assembly of finished products, after its decision last year to buy liquid crystal display panels from Sharp Corp to start offering LCD TVs.

 

Pioneer’s plasma business has been struggling to compete with larger rivals with better production efficiency such as Panasonic, Samsung and LG Electronics.

Pioneer has a target to sell 480,000 plasma TVs in this business year, ending on March 31, less than one-tenth of Matsushita’s sales target of 5 million units.

Pioneer bought the Kagoshima plant from NEC and now wants NEC to buy it back, the Asahi said.

A Pioneer spokesman said its flat TV strategy will become available when it unveils a mid-term business plan in early March, but nothing specific has been decided.

Shares in Pioneer were up 3.8 percent by early afternoon, outperforming the Tokyo stock market’s electrical machinery index IELEC, which rose 2.2 percent.

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