Sony and Toshiba are both outsourcing their LCD TV production to China. What they did to the US decades ago China is doing to them. Of course, one of the differences is that they (Japan, that is) have fewer young workers to keep employed than the US.
Sony to outsource high-end LCD TVs to Foxconn and Wistron
Siu Han, Taipei; Yvonne Yu, DIGITIMES [Monday 18 October 2010]
digitimes.com
Sony is expected to outsource its high-end LCD TVs to Taiwan-based makers, with Foxconn Electronics (Hon Hai Precision Industry) expected to produce frameless ultra-thin models and Wistron is expected to produce the Google TV for Sony.
Foxconn declined to comment regarding its clients or orders.
Sony has been adjusting its business strategy for LCD TVs, actively developing emerging markets and increasing its outsourcing ratio. Sony's LCD TV outsourced orders are expected to reach 70-80% of its total shipments in 2011, of which its Taiwan-based manufacture partner Foxconn is expected to receive orders of 15-18 million units, exceeding its fellow Taiwan-based competitor Wistron.
In order to save its precarious TV business, Sony has been selling its overseas LCD TV manufacturing plants, increasing its outsourcing and expanding its lineup of lower-cost models. Amid the increasing market share and sales, Sony has turned profitable and ended the embarrassing situation of six years of losses. Sony is expected to reach its shipment goal of 25 million LCD TVs for the 2010 fiscal year ended March 2011, and the shipments may increase to 26 million units for the year, of which 40-50% will be outsourced.
Sony originally planned to increase its LCD TV shipment goal for 2011 to 40 million units. However, the company has lowered the goal to 36 million units amid weakening demand in the global market. In terms of manufacturing strategy, 20-30% of the total shipments will be in-house designs and the rest will be divided equally between ODM and OEM, of which high-end frameless models will be produced by Foxconn and hit the market in the first half of 2011. This will be the first time for Sony to outsource high-end models to Taiwan-based makers.
Sony indicated that its outsourcing strategy for LCD TVs will remain unchanged and will continue to focus on increasing competitiveness, but the company declined to comment on its orders to an individual manufacturer. Observers in the TV industry noted that Sony will release significant orders to Foxconn as the Taiwan-based maker took over the LCD TV assembly plants in Mexico and Slovakia, making Foxconn the largest manufacturer for Sony with 16-18 million units of orders. Although OEM orders will remain as the majority party of the total orders from Sony, Foxconn's affiliate LCD panel maker Chimei Innolux (CMI) is expected to benefit and supply TV panels for about 40-50% of the total orders.
TV players noted that profit from Sony's high-end frameless LCD TV orders to Foxconn is still to be assessed as Foxconn will need to invest a large amount of capital for equipment to produce the models.
As for Wistron, the company is expected to ship 10 million LCD TVs in 2011, of which 7-8 million units will be orders from Sony. Wistron has landed orders for Google TV from Sony, and market observers are optimistic about the growth of the Internet-connected smart TV market in 2011 and expect smart TVs to become mainstream products in the North America LCD TV market.
TPV Technology's LCD TV shipments to Sony are expected to drop significantly in 2011 as Foxconn joined the production. TPV's LCD TV shipments to Sony will reduce to lower than one million units in 2011. Compal Electronic became one of Sony's manufacturers in the second half of 2010 and is expected to supply LCD TVs that will be sold in Japan in 2011 with a total shipments of under one million units.
After two years of reorganization, Sony currently is the leading LCD TV vendor in the India market, exceeding Samsung Electronics and LG Electronics. In China, Sony expects to double its sales goal in 2010 compared to 2009. Sony is expected to outsource more orders in 2011 amid increasing costs due to the appreciation of the Japanese yen. |
