Tokyo-AP reported today that Sony (SNE) is in talks with Samsung to expand the firms' joint venture (S-LCD Corp.) in LCD panel production in order to meet rising demand. In Sony's 3rd quarter ('05) earnings release today Sony credited strong LCD TV sales as one of the main reasons for its surprisingly strong quarter. The talks between Sony and Samsung are said to be over building a second plant that would cost about 300 billion yen (US$2.6 billion at today's exchange rate of Y115.8/US$1). Sony and Samsung are two electronics giants that have been moving in opposite directions with the former struggling and now in the midst of restructuring and the latter surging and now with a market cap more than twice Sony's. I have been doubtful of Sony and even questioned the JV with Samsung. However, it now appears Sony made a wise decision in teaming up with its rival in LCD panel production.
More details of the Sony-Samsung JV (S-LCD Corp.) from Tokyo-AP:
• The new plant under discussion would begin operating in 2007
• Sony receives 50% of the LCD panel output from S-LCD Corp.
• Sony raised its LCD shipment target today for the FY ending in March to 2.8 million from 2.5 million
• Sony and Samsung have each contributed about US$1 billion to S-LCD Corp., established in April '04
• Last November the firms announced an additional US$87 million investment in S-LCD Corp. to boost capacity
Following its earnings release earlier today in Japan, Sony's ADRs (SNE) are trading up $4.12 (+9.52%) at the time of publishing this post.
SNE 1-yr chart: