APRIL 2008 W4 ALERT
Sharp Shift in Sharp's Strategy
Company Aggressively Pursues Goals & Partners
<Nikkei-TOKYO><April 16, 2008>In a report appearing last week in the Nikkei, Sharp Corp. outlined aggressive new goals to dramatically increase the growth of their LCD television business in order to become the largest LCD supplier in the world by 2011. To achieve such a lofty goal, Sharp has decided to abandon their go-it-alone strategy of promoting their own Aquos line of LCD televisions and to pursue business partnerships with Sony, Toshiba, and perhaps others for Sharp produced LCD panels.
In the report, Sharp tells the story of being shocked to see Circuit City Stores, Inc. selling an Aquos 52-inch HDTV for only $2199 in a Thanksgiving week special, several hundred dollars less than competitive products from rival Samsung. The surprise was a vivid demonstration of the relative weakness of the Aquos brand in the United States. According to the Nikkei, in Japan the Aquos brand owns a full 40% of the market share for televisions.
The result of the Circuit City shock was to convince Sharp to overhaul their strategy of relying solely on Aquos branded finished television products and, instead, shift to providing LCD panels to other television brands as a way of increasing their share of the overall LCD business.
Sharp has already penned partnerships with both Sony and Toshiba and is providing panels to them both. Sony, who also has a joint venture with Samsung, has agreed to invest in Sharp’s new Sakai factory which will produce panels for both companies.
Sharp President Katayama has set a goal of 30% share of the world market for LCD TV panels by 2011. This would vault them ahead of Samsung in which recent data showed had 25.7% of the world market last year.
To achieve this goal, Sharp will launch the world’s most efficient panel production facility with a 1 trillion yen production complex in Sakai. The complex will include factories from Sharp, Corning Inc., and Dai Nippon Co., as well as eleven other companies. Corning is the world’s largest LCD glass substrate manufacturer. Dai Nippon Printing is a major producer of LCD color filters.
The complex will feature the world’s first 10th-generation panel plant which will use 2.85 X 3.05 meter glass substrates. Sharp anticipates that the factory will be able to produce the equivalent of an amazing 13 million 42-in panels at full capacity – triple their estimated 2010 capacity.
Sharp will retain Aquos, as some analysts suggest that they will need Aquos to provide a profit buffer to the ever shifting vagaries of the panel business.