Japanese Companies Outsource LCD Production

Trading Markets reports Sony and Toshiba will both outsource some of the production of their LCD screens to Taiwanese elecronic manufacturing services (EMS) companies. Sony will outsource to Hon Hai and Toshiba to Compal. Trading Markets writes:

While both firms will continue making LCD TVs at their own factories, they intend to meet the growing demand by using EMS (electronics manufacturing services) firms in Taiwan, the business daily said.

Their strategy stands in sharp contrast to that of Sharp Corp and Matsushita Electric Industrial Co, which are focusing on maintaining their technological superiority by making LCD panels and TVs themselves.

Sony farmed out production of some 500,000 LCD TVs to Taiwanese firms in the year to March 2008, but it now aims to boost the figure to more than 3 million in the year to March 2009.

Tokyo-based Sony has signed a contract with the Hon Hai Precision Industry group, the world's top EMS provider, the report said.

Toshiba has contracted out LCD TV production to Compal Electronics Inc, which will make slightly more than 20 percent of Toshiba's estimated 7 million planned LCD TV shipments in the year to March 2009.

While both firms will continue making LCD TVs at their own factories, they intend to meet the growing demand by using EMS (electronics manufacturing services) firms in Taiwan, the business daily said.

Their strategy stands in sharp contrast to that of Sharp Corp and Matsushita Electric Industrial Co, which are focusing on maintaining their technological superiority by making LCD panels and TVs themselves.

Sony farmed out production of some 500,000 LCD TVs to Taiwanese firms in the year to March 2008, but it now aims to boost the figure to more than 3 million in the year to March 2009.

Tokyo-based Sony has signed a contract with the Hon Hai Precision Industry group, the world's top EMS provider, the report said.

Toshiba has contracted out LCD TV production to Compal Electronics Inc, which will make slightly more than 20 percent of Toshiba's estimated 7 million planned LCD TV shipments in the year to March 2009.

The price competition for these products is becoming more intense and the companies will have to find ways to cut their costs. Outsourcing may be their only option.

Trading Markets: Japan's Sony, Toshiba to farm out more LCD TV output - report