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Leading Korean business media have turned on local CE giant Samsung claiming that the company is facing a crisis under an aggressive attack from Japanese rivals. The problem for Samsung they claim is that while in a business partnership with Sony, the company is trying to undermine Sony in the marketplace particularly in the LCD TV market.

The issue came to a head at the weekend when it was revealed that Sony is set to cut a deal with Japanese LCD TV manufacturer Sharp for its high end HD Bravia TVs. A key problem for Sony is that the relationship with Samsung is not a true 50/50 partnership and that S-LCD is 49% Sony and 51% Samsung with Samsung management running the joint venture operation.

This, SmartHouse has been told, has led to ongoing conflict with Samsung management being accused of favouring supply to Samsung over Sony.

Samsung has claimed that it will continue its strategic partnership with Sony and sees no problem with ongoing talks with the Japanese panel manufacturer to jointly invest in the second phase of eighth generation LCDs.

“For now, we don’t have any plans to cut our partnership with Sony. Sony still buys some 50 percent of its LCD panel demand through a joint venture with Samsung,” Lee Sang-wan, chief of Samsung Electronics LCD business, told The Korea Times on the sidelines of a Korea Display Industry Association meeting held in southern Seoul.

“I am positive about the ongoing talks with Sony over the Japanese players’ possible involvement in the second phase of eighth generation LCDs,” he added.

Samsung Electronics and Sony established the joint LCD maker S-LCD in the South Korean province with an investment of 2 trillion won in 2003. The two have been enjoying a honeymoon phase since then, with Samsung buying half of S-LCD’s output and Sony the other half.

 

Lee’s comment comes after Sony reportedly said it is inclined to buy television LCD panels from its local rival Sharp starting as early as this year in a bid to diversify its procurement channels to meet rising demand and cost cuts.

Sharp will provide the latest 10th generation panels to produce highly-competitive 40 inch level displays that will be produced at its plant in Sakai, Osaka prefecture, which is slated to start operating this year.

Like Sony, Japanese manufacturers are busy shying away from their vertical integration strategies to succeed in the global sales battle and to regain their past glory in the global LCD market.

Despite undeniable strong edges in original technologies, Japanese players have failed to maintain their dominant positions in the segment mainly because of a passive attitude towards massive investments unlike Samsung Electronics.

Panasonic, which has recently announced a plan to build a new manufacturing plant for LCD panels in Hyogo prefecture to curtail a plasma display-centered business, has been strengthening a three-way partnership with Hitachi and Canon.

Experts and industry sources say the fight among the world’s leading LCD TV makers has entered the second round with the panel procurement deals between Japanese firms now in place amid management vacuum in Samsung Electronics _ the world’s No. 1 LCD maker.

Top executives of Samsung Electronics are currently busy soothing investors’ worries over the deepening Samsung Group-involved bribery scandal. The group’s key flagship unit has postponed holding several strategic meetings to finalize its detailed investment plans for this year.

“Japanese rivals believe this is a good chance to surge ahead of Samsung in the sector,” a Samsung official said.

“Possibilities have risen to buy LCD panels from Samsung Electronics or the opposite,” an official from the LG.Philips LCD added.

A recent data from DisplaySearch, a market-research firm, has shown that Sony overtook Samsung Electronics as the world’s biggest manufacturer of LCD televisions with 19.5 percent of the global market share in the fourth quarter, while Samsung followed with 19.3 percent in the same period. Sharp was surveyed as No. 4 with some 10 percent of share.

According to industry estimates, global demand for LCD TVs will reach 155 million units in five years, up from 74.8 million in 2007.

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