Market Overview

Sony, Panasonic Join Forces for OLED Production


Two prominent electronics manufacturers are teaming up to produce next-generation TV sets using OLED technology.

According to the Associated Press, Sony (NYSE: SNE) and Panasonic (NYSE: PC) have decided to work together in an effort to compete more effectively against Samsung, the current world leader in TV sales.

Television sets using OLED (organic light-emitting diode) technology are more expensive than LCDs, but the former offers many advantages. OLEDs do not require a backlight; thus, TVs made with this technology can be thinner and lighter than their LCD counterparts. Sony and Panasonic hope to achieve low-cost mass production of OLEDs by 2013, AP reports.

Both companies have endured significant declines, with the former company reporting an annual loss of $5.6 billion. Panasonic suffered a $5 billion loss.

In the three months leading up to June, shares of Sony declined more than 35%. Shares of Panasonic declined roughly 30%. However, both companies have been on the rise over the past few weeks, despite the fact that worldwide TV sales across all manufacturers are beginning to fall.

AP quoted a Fitch Ratings analyst, who referred to the Sony/Panasonic union as a previously "unthinkable" development that underlines "the fall of Japanese tech companies."

"Japanese OLED investment is better late than never," Alvin Lim, Associate Director at Fitch, told AP. "While consumer demand for OLED is still unproven, without investment Japanese manufacturers could become stranded in the TV market should this technology become mainstream."

AP credits Sony with selling the first OLED TV. But it was not the small size (the TV measured 11 inches diagonally) that prevented the television from flying off store shelves. Rather, it was the hefty price tag that deterred consumers: $2,500.

Prior to today's announcement, Sony ended a joint venture with Samsung, which previously provided the liquid-crystal displays that Sony used in its TVs.

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Posted-In: AP Associated Press LCD OLED Panasonic SamsungNews Tech Best of Benzinga


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