Long-time rivals Sony (NYSE:SNE) and Panasonic (NYSE:PC) are teaming up to jointly develop next-generation high-resolution television panels known an OLED in an effort to streamline costs and better compete with Samsung and Apple (NASDAQ:AAPL).
The Japanese consumer electronic giants plan to manufacturer to OLED panels and modules for TVs and large-sized displays by using their core and printing technologies. They are aiming to reach low-cost mass production during 2013.
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Terms of the deal were not disclosed.
Sony and Panasonic have been struggling to keep up with competition and rising costs. Sony launched the world’s first OLED TV in 2007 with its 11-inch model and in 2011 released a 25-inch professional OLED monitor, and Panasonic has led the development of large-sized screen OLED panels and owns related production and equipment technologies.
However, Samsung Electronics and LG Electronics have both invested heavily in the development of OLED TV, which has become the successor of liquid crystal display technology.
LG Electronics and Samsung introduced their 55-inch OLED TVs earlier this year and have said they plan to mass produce later in 2012.
Fitch Ratings said the marriage is a “natural development,” giving the companies the ability to develop new products in a cost-effective manner as they struggle to compete with Samsung and other South Korean manufacturers.
“It further illustrates the fall of Japanese tech companies,” Fitch said. “Whereas such tie-ups between fierce competitors in the TV segment were once unthinkable, they are now necessary to claw back the technological and market leadership ceded to Korean manufacturers.”
In the medium term, Fitch expects the strategic alliance won't have a significant impact on the panel and TV markets, as the Korean manufacturers are already “way ahead in the development cycle,” the ratings company said.
Yet, while Fitch notes it will be difficult for the Japanese to catch up with the market leaders without substantial investment, its associated director of the telecom, media and technology team, Alvin Lim, said it is “better late than never.”
"While consumer demand for OLED is still unproven, without investment Japanese manufacturers could become stranded in the TV market should this technology become mainstream,” he said.