Sony is outsourcing more and more of its LCD-TV production, as well as its LCD panel production.

Ken Werner
Senior Analyst and Editor
of HDTV Retailer and
Mobile Display Report

Given the viciously competitive market for 32-inch sets, it’s not surprising that Sony must have its sets made outside of Japan to more-or-less match the prices of price-conscious suppliers. A portion of the company’s low-end, 32-inch LCD-TVs are made by Hong Kong-based TPV Technology, with panels from AUO and chips from Trident, reports the Chinese-language Economic Daily News (EDN). Sony makes its own panels (through its S-LCD joint venture with Samsung) and its own video ICs, but the cost of these components is not consistent with the BOM for a profitable, low end 32-inch LCD-TV, EDN’s sources said.

What may be surprising is that TPV has now received orders from Sony for 40-inch LCD-TVs - the first time Sony has outsourced any of its 40-inch LCD-TV production, EDN said. The orders are primarily for the China market, and the outsourcing lets Sony price the sets aggressively. But as with the 32-inch models, the 40-inch sets for the China market may not have top of the line Sony processing and S-LCD panels.

Early this year, Katsumi Ihara, executive deputy president of Sony’s procurement strategies and TV & video business, was quoted in the Chinese-language website Sina.com as saying Sony expects LCD-TV sets with screen diagonals of 40 inches and over to account for half of its LCD-TV shipments by the end of 2006, compared to 30% a year ago.

S-LCD has invested US$1.9B to construct its new Gen 8 fab, which will begin production late this year - several crucial months later than Sharp, which will have TV sets with Gen 8 panels in U.S. stores in time for the holiday shopping season. But with the start-up of its Gen 8 plant on the horizon, EDN’ s sources were speculating that Sony might shift its focus to TVs with screens of 46 inches and greater in the second half of 2007. This would be consistent with Sharp’s strategy, as indicated at that company’s New York press event held last week (see September’s Projection Monthly with Flat Panel Coverage for full details).

Sony has announced it will introduce a 52-inch LCD-TV for the Japanese market on October 20 at a price of ¥800,000 yen (US$6,823). That compares with the $4799.99 MSRP Sharp announced for the 52-inch LC-52D62U available in U.S. stores next month. It will be interesting to see what happens to Sony’s MSRP when the company gets Gen 8 panels into its 52-inch sets. When Sony does that, consumers can be confident these high-end sets will be Sony products to the core. But when they buy Sony 32s, perhaps they should look for a logo that says "Trident Inside."