Samsung and Sony have dissolved their S-LCD joint venture meant for the production of liquid crystal display panels.
The S-LCD joint venture between the two electronics giants Samsung Electronics Co. Ltd and Sony Corporation was established in April 2004 for the production of liquid crystal display panels. Since then, the joint venture has been producing seventh and eighth-generation amorphous panels for both Samsung and Sony LCD televisions and mobile phones.
However, this seven-year-old venture has reached the dead end, as Sony has dissolved the venture citing massive losses as the reason. Sony was not able to keep up with the production of flat panel television sets, in spite of investing in a Samsung factory for the steady supply of LCD panels. The venture eventually turned out to be a costly affair for Sony as it is reported to have incurred an estimated loss of around US$ 846 million in the third quarter of the current fiscal year.
In an attempt to recover from the heavy losses, Sony has decided to sell all of its shares in the joint venture for about US$ 935 million to Samsung. This may be seen as a desperate attempt by Sony to cover up all the losses suffered in its unproductive association with Samsung. However, the final decision is yet to be taken.
For continuing the production of LCD television, Sony would announce a new partnership with Samsung to buy the LCD panels. Sony still uses the panels made by other manufacturers for the production of Bravia TV sets and it would continue buying them at the market price.
The decision to dissolve the joint venture seems to be a wise decision from Sony. When the final agreement is completed, Sony will have considerable savings to start a new venture.