Tokyo: Sony Corp has delayed a decision on whether to raise its stake in Sharp Corp’s state-of-the-art Sakai TV panel factory, in a fresh blow to Sharp, which has already halted production at the plant for at least a month.
Sony will not raise its stake in the liquid crystal display (LCD) production joint venture for at least a year, a Sony source told Reuters. During that time, the two companies will continue to discuss the possible investment, said the source, who is involved in the negotiations.
The source spoke on condition of anonymity because the move has not been made public.
Speculation has been swirling for months that Sony would abandon the plan to raise its stake in Sharp’s factory in favour of boosting procurement from cheaper makers in other parts of Asia.
The electronics giant, which competes with Samsung and LG Electronics in televisions, needs to slash costs as it heads for a seventh straight year of losses in its TV business.
Rivals are also struggling, with Philips of the Netherlands announcing on Monday it would hive off its own loss-making TV business.
Sony had initially planned to invest up to ¥68 billion ($822 million) in Sharp’s western Japan plant by the end of April this year, raising its stake in the venture to 34% from the current 7%.
Sharp has been forced to suspend operations at the 10th generation LCD plant, the most advanced in the world, and another TV panel factory for at least a month due to plunging domestic demand and a shortage of a gas used in the production process following the 11 March earthquake.
In a sign of over-supply in the market, rival panel-maker LG Display posted a second straight quarterly loss on Monday, blaming tumbling LCD prices, but said it expected the sector to recover later in the year.
Sharp’s TV sales are focused on the domestic market, where demand is expected to slump this year, after many households already replaced their sets in 2010, prompted by government incentives and the switch to digital terrestrial TV in July 2011.
Sony spokeswoman Yuki Shima said that abandoning plans for raising its stake to 34% from 7% was one option being considered by the consumer electronics giant, but that talks would continue until the end of the month before a decision was made.
Sharp has forecast operating profit of ¥90 billion for the year to March, compared with a mean estimate of ¥83.5 billion in a poll of 22 analysts, eight of whom have revised their estimates since the quake and tsunami that has left about 28,000 people dead or missing.
Sharp will announce its full-year results on 27 April, while Sony has yet to set a date for its earnings announcement.