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Sharp is considering buying panels from third parties for its liquid crystal display flat panel TVs for the first time to make up for a shortage that is hurting its overseas market share.

The Japanese group, the world’s largest LCD TV maker, said it was looking into the possibility of procuring panels from two Taiwanese companies – Chi Mei Optoelectronics (CMO) and Quanta.

“We don’t have enough panels,” said Toshishige Hamano, senior executive director. “If they can make the same quality panels as Sharp then we would like to procure from them,” he said.

Any move by Sharp to buy TV panels from third parties would mark a significant shift in policy. Sharp has until now pursued a strategy of vertical integration and has strictly guarded its LCD technology.

Sharp said last week it had agreed to cross-licence some of its LCD patents to CMO, mainly for small TVs and PCs. It has also licensed LCD technology to Quanta for PCs, which are not as technology-intensive as LCD panels for TVs.

Sharp continues to suffer from a shortage of panels, which has prevented it from keeping pace with surging worldwide demand for LCD TVs. It plans to increase capacity by 20 per cent this spring.

“We are seeing strong demand [for LCD TVs] but unfortunately we can’t provide sufficient product,” Mr Hamano said. “It is very frustrating.”

Sharp blames a lack of product in part for a significant fall in its market share in the US following Sony’s launch of its new Bravia LCD TV line-up, which uses panels made by a joint venture with Samsung.

Sharp has prioritised Japan, where it has a 40 per cent market share. In the US, its market share has fallen from about 25 per cent in value terms before Sony’s assault to 18 per cent last December, Mr Hamano said.

Mr Hamano said that even with a new line scheduled to come on stream later this year, Sharp will only just meet its forecast of increasing global shipments from 4m units to 6m in the year starting April.

But he said he expected Sharp to regain market share once its 8th generation factory came on stream later this year.

“We are not at all concerned about the fall in our market share in the US and we strongly believe we can make up for this,” Mr Hamano said.

The new factory will produce TVs in the large sizes favoured in the US and Sharp plans an aggressive marketing campaign to coincide with their launch, he said.

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