On successive days this week, Syntax-Brillian announced two manufacturing moves in HDTVs. On Tuesday the company announced plans to assemble LCD and LCOS TV in California - a location that surprised many. On Wednesday, it announced the release of an LCOS engine order to its China subsidiary in a bid to be successful where so many have failed in the past. Syntax-Brillian has been raising eyebrows with its success to date, so are these latest moves the next stage in a successful business strategy or a misstep?
Analyst and Editor
of Insight Media
Brillian, an LCOS imager company, merged with Syntax, an LCD-TV maker, in November 2005 - a move that gave Brillian access to capital, the Olevia brand and global distribution. Syntax gained access to LCOS technology, but it continues to partner with Asian players to gain leverage in a market dominated by much larger players. Most are aware of the Olevia brand of LCD-TVs, which have made significant in-roads into the distribution channels with great sales success.
To continue this success, Syntax-Brillian announced that Solar Link Technologies will immediately begin assembling its LCD-TVs and LCOS rear projection TVs in Ontario, CA. Solar Link is a wholly owned subsidiary of Taiwan-based Pro Chen Group. They expect to make 100K-200K TV sets per year at the plant for delivery to North American markets.
The decision to assemble high-tech TVs in the US, particularly in California where labor rates are so high, seems to buck conventional wisdom, at least for RPTVs, where most assembly is done in Mexico. But it may make more sense than it appears. With the modular mechanical design of modern TVs, the labor cost of final assembly can be reduced to a few percent of the total bill of material. It also reduces shipping costs and import duties.
Has something changed in the assembly math? How do the numbers add up? What is the business case? Are they relying on Taiwanese cost-reduction expertise? How much does the company value being able to say "Made in the USA" on the box? These are the questions we planned to ask Brillian Syntax about the move, but we were unable to connect with them in time for our deadline. When they get back to us, you can read about it in HDTV Retailer.
In the second announcement, the company received an order to for LCOS imagers from its light engine manufacturer, Sino-Brillian Display Technology Corp., a joint venture with China South. Announced this April, the plant in Nanyang, China began operations last month and targets 300K units annually for global delivery.
Is this another piece of the LCOS puzzle solved? Successfully making LCOS light engines in production quantities has proven elusive for all but the biggest brands. Right now only Sony and JVC are successfully shipping production quantities of LCOS light engines through their vertically integrated supply chains.
All Taiwanese and Chinese venture to make LCOS light engines cost effectively has failed so far, so again, what is different this time around? Why does Syntax-Brillian think they can be successful this time around?
They should know it’s not that easy. JDS Uniphase gave up trying to manufacture the highly touted UltreX 3 engine for Brillian a year ago, a design Brillian stopped using for cost reasons. Even 3M Precision Optics, the designer of Brillian’s current engine, has admitted to a price challenge with its design.
The light engine is the most expensive component and key price driver of an MDTV. Right now, the 65-inch award-winning Brillian flagship model retails for $8,000. Not too many will sell at that price, even though it’s a much better value than $20,000 for a 65-inch LCD-TV.
However, the latest 60-inch model of Sony SXRD-based LCOS RPTV will sell for "only" $4,500. Many feel that real traction will begin to occur when the price point reaches $2,500 for TVs in this size range. That will be a tough hurdle for everyone in the supply chain.
By then, a lot more 1080p content will be available, making TV sets this large that much more worthwhile.
In the meantime, we can’t tell if Syntax-Brillian is making the right moves. But they’ve made some good moves in the past, so in the meantime, let’s give them the benefit of the doubt. -JD