By Tim Kelly and Ayai Tomisawa
TOKYO, April 18 Japan's Sony Corp is in talks
with Taiwan's AU Optronics Corp to jointly produce
next-generation OLED televisions, the Yomiuri Shimbun reported,
positioning itself for the post-liquid crystal display (LCD) TV
A commitment by Sony to a technology that Korean
rivals Samsung Electronics and LG Electronics
are promoting would more clearly define the battle
lines over what is seen as the next generation of TV sets to
Both Sony and AU Optronics declined to comment on
the report, which comes after Sony's new CEO, Kazuo Hirai, last
week suggested he was open to cooperation in new TV technologies
as he outlined a turnaround strategy for his loss-making
An industry source told Reuters earlier this month that
there was talk Sony was considering a tie-up with AU Optronics.
"We know that Sony will have to form some kind of alliance
with a third party since it would be difficult for it to capture
more share in the OLED TV area alone. It's not a surprise if it
is considering a tie-up (with AU)," Nobuo Kurahashi, an analyst
at Mizuho Investors Securities, said on Wednesday.
"For Taiwan and Japan, their interests coincide. If they
don't do anything, there will always be a gap in market share,"
he added, pointing to competition from South Korea.
Both Samsung and LG in January displayed prototype 55-inch
OLED (organic light emitting diode) screens - which boast
sharper images and do not need backlighting - at the CES
consumer electronics show in Las Vegas.
Sony, which pioneered the technology with the world's first
OLED TV in 2007 halted production of the $2,000 screens for
consumers in 2010 amid a global downturn, focusing instead on
3D. Sony still makes OLED screens costing as much as $26,000 for
high-end business customers.
PRICE IS KEY
For any maker of credit card-thin OLED displays, the
obstacle to consumer acceptance is price. At a rumored price tag
of $10,000, the 55-inch models from Samsung and LG would be ten
times the price of an equivalent LCD TV.
The company that can find a way to mass produce at a sharply
lower cost would have a headstart over its rivals. Sony, which
no longer owns factories capable of fabricating TV size display
panels would either have to invest in new plant or tie up with
another maker to stay in the race.
OLED is not the only new technology that may be offered to
consumers. Japanese makers including Sony are also working on
ultra high-definition sets, dubbed 4K. Sony also has what it
calls crystal LED, which also does away with a backlight, that
it says offers richer colors and better contrast than
Taiwan's LCD industry, which made a loss of T$125.7 billion
($4.2 billion) last year, is expected to benefit from increasing
cooperation and outsourcing from Japan in terms of technology
Sony shares rose as much as 2.4 percent in Tokyo before
retreating to fall 0.6 percent in a stronger overall market,
while AU Optronics was up 0.35 percent.
The price barrier to OLED's wider consumer acceptance means
LCD is still likely to dominate the global TV market for some
time to come. Sony's Hirai in February predicted it would remain
the main TV technology for at least the next three years.
Hammered by its aggressive Korean rivals and overrun by
today's gadget leader Apple, Sony badly needs a new hit
product to refill its coffers. It has recorded losses for the
past four years and eight consecutive years of deficits in its
TV unit amounting to $10 billion.
For the year that ended March 31, the company forecast a
record net loss of 520 billion yen ($6.4 billion).
Hirai's revival strategy for the next three years includes a
push into smartphones, growth in games and cameras and big cost
cuts in its TV business that has not made a profit in eight
In the TV business, Hirai aims to cut fixed costs by 60
percent and operating costs by 30 percent over two years, while
offering fewer models.