Sony, Panasonic in talks to make OLED TVs - sources

Sony Corp and Panasonic Corp are in talks to develop the technology to mass produce next-generation OLED televisions, aiming to compete with South Korean rivals in a technology widely seen replacing current LCD TVs, sources close to the matter said on Tuesday.

Samsung Electronics and LG Electronics plan to sell 55-inch OLED televisions, which are as slim as 4 millimetres and consume less power and offer sharper images, by the end of this year.

Sony and Panasonic, aiming to capture a slice of the market, are in discussions to share organic light emitting diode (OLED) technologies, the sources said. The Nikkei business daily also earlier reported the two firms were in discussions.

Kyoko Ishii, senior coordinator of global corporate PR for Panasonic, said: "The content of the report is not announced by Panasonic. Panasonic will continue its development and verification of OLED based on the result of research the company has been doing at its laboratories. The timing of the commercialization of OLED has not been decided yet."

Sony, which pioneered the technology with the world's first OLED TV in 2007, halted production of the $2,000 screens three years later because of the global downturn. Sony still makes OLED screens costing as much as $26,000 for high-end customers.

Sony declined comment on Tuesday.

Japanese firms that ruled the global TV market in the 1980s and 1990s have been battered by their aggressive Korean rivals, along with weak demand for the TVs they make and a stronger yen that makes their exports more expensive. Sony, Panasonic and Sharp Corp reported a combined net loss of more than $20 billion in the year to end-March.

Price is key
The Japanese woes coincide with a battle in the TV market between credit-card-thin OLEDs and ultra-high definition sets.

Shipments of OLED TVs may grow to 2.1 million sets in 2015 from just 34,000 this year, according to research firm IHS Inc.

Mass producing affordable OLEDs will be key.

"Their (Sony and Panasonic)'s overseas competitors have gotten a head start in this area and I feel like they're stepping into this too late," said Masayuki Otani, chief market analyst at Securities Japan. "There's no question OLED TVs are going to be the mainstream. The issue is price and size of the displays," he added.

"Japanese makers haven't been able to produce OLED TVs that are as large as Samsung's ... I think there's an element of Japanese pride to this - the fact that Panasonic and Sony will work together to produce OLEDs to beat their Asian rivals. But I do have serious doubts on whether they can catch up."

Shares in Sony, which makes Bravia TVs, and Panasonic, which sells TVs under the Viera brand, fell in mid-morning trade after rising earlier. Sony was down 2.3 percent at 1,128 yen, while Panasonic dropped 2.9 percent to 561 yen.

Shares in the two once-mighty electronics firms slumped to their lowest closing levels in more than three decades on Friday, as investors doubted Sony had a strategy to fix its loss-making TV business as well as compete in the smartphone market and fretted about Panasonic's future after a record annual loss due to slumping sales of flat panel TVs.

"Both Sony and Panasonic would not be successful if they were to develop and sell OLED televisions alone. They have no choice but to find a partner," said Makoto Kikuchi, chief executive officer at Myojo Asset Management. "It (tie-up) is a plus, but their earnings wouldn't be rosy in the short-term because of this."

Talking with Taiwan
An industry source told Reuters last month that Sony was in talks with Taiwan's AU Optronics Corp on a possible tie-up to produce OLED televisions.

"I think the (Sony-Panasonic) tie-up is to make sure they can stay ahead of the Korean rivals in terms of technology because Samsung and LG have expanded very quickly and have the capacity ready. AUO is also under financial pressure and a technological bottleneck in OLED," said H.P. Chang, head of research at Taiwan-based LCD industry research company Witview.

"But if Sony and Panasonic need to have a partner to enlarge production scale, AU is likely their only choice," he added.

Panasonic also plans to invest about 30 billion yen in its Himeji plant in western Japan for a test production line of OLED panels, the industry source said.

Outgoing Panasonic President Fumio Ohtsubo told a news conference last week the company was unlikely to do all necessary investment in OLED panels on its own. "It is important to reduce investment risk by finding the best partner," he said.