Samsung and Sony have announced and signed agreements to transition the current business relationship with respect to LCD panels. And under the agreement, Samsung Electronics will buy Sony Corporation’s stake in their joint liquid crystal display (LCD) venture for $939 million, the company said in a regulatory filing today. Sony will take a charge of about 66 billion yen ($846 million) in the quarter ending December 31 after exiting the venture, the Tokyo-based company said in a separate statement.
The move comes as Sony has been restructuring its TV business, which has been making a loss for the past seven years. Samsung, meanwhile, has gone on to become the world’s largest maker of TVs and flat screen panels.
Sony warned in November of a fourth straight year of losses for the financial year to next March, with its TV unit alone set to lose $2.2 billion on tumbling demand and a surging yen.
“This deal will allow Sony to acquire LCD panels from Samsung Electronics in a stable way based on market prices, without the responsibility or costs that come with operating a factory,” Sony said in a press release.
Sony’s exit from the joint venture, set up in Tanjeong, South Korea, in April 2004, would allow it to switch to less expensive outsourcing options that might allow it to resuscitate its struggling TV business. The only other LCD panels Sony manufactures are at its joint venture with Sharp, in which Sony owns a 7 percent stake.
For Samsung, those deals came as an acknowledgment of its emergence as a global player. The South Korean manufacturer has now taken over from Sony as the consumer electronics king. In its latest full financial year, Samsung earned $14 billion on sales of more than $134 billion, while Sony lost $3 billion on sales of $92 billion.
Samsung is the world’s No. 1 TV maker, while Sony vies for the No.2 title with South Korea’s LG Electronics Inc.