Toshiba Sells LCD Plant to AUO; Sony Strikes Alliance With Hon Hai Precision

Toshiba’s and Sony’s offloading manufacturing facilities signals a further retreat by high-profile brands from production and a tightening of their relationships with OEM suppliers, analysts and industry executives told Consumer Electronics Daily.

Toshiba Mobile Display (TMD) agreed to sell its 4.5-generation low-temperature polysilicon (LTPS) plant in Singapore to AU Optronics for $107 million. The factory is run by TMD subsidiary AFDE Pte. And Sony forged an alliance with Hon Hai Precision, which will buy 90 percent of a Sony LCD TV assembly plant in Nitra, Slovakia, that builds sets for the European market.

Sony and Toshiba each “will sacrifice a little bit of control over product design but get more control over fixed and variable costs,” said Andrew Abrams, an Avian Securities analyst. “Many of the TV brands are removing themselves from the production, which is the direction the business is going. The ability to design well is what gets you the customer base."

Sony has 2,500 employees at the plant in Slovakia, opened in August 2007. Hon Hai will keep the factory as a “key location” for assembling LCD TVs for Europe, Sony said. Sony’s European supply-chain-solutions group will lease part of the plant for use as a logistics center, Sony said. The transaction is expected to be completed by September.

Toshiba said it will keep sourcing LTPS LCD panels from the Singapore factory it’s selling. The purchase will raise AUO’s profile in LTPS as the company is moving to broaden its business beyond low-margin standard LCD panels, Abrams said. AUO has a 3.5G factory in Taiwan producing two- and three-inch LTPS panels for smartphones with 240x320 and 960x240 resolutions and 150 and 350 candelas.

The Singapore facility opened in 2004 as part of the former Toshiba Matsushita Display Technology Co. joint venture. Its production ranges from 1.5-3-inch LTPS displays for smartphones to 10.4, 12.1, 13.3 and 15.4-inch PC panels for notebook PCs sold by Dell, Lenovo and Sony. It also produces 5.8-to-9-inch automotive displays. The factory has monthly capacity for 45,000 glass sheets or 1 million notebook panels.

"AUO’s general philosophy has been that they need to broaden what they do because they just can’t continue only in the traditional LCD business,” Abrams said. “AUO wants to do more non-traditional stuff to get higher margins” than those generated by TV panels, he said. AUO also has revived development of active matrix OLEDS. TMD will continue running 4.5G and 2.5G plants in Japan.

TMD took control and renamed the LTPS joint venture in May 2009 when it bought partner Matsushita’s 40 percent stake. Steve Vrablik, business development director at TMD’s U.S. group in Buffalo Grove, Ill., declined to comment on the sale to AUO. Toshiba has moved in recent years to free itself of LCD production investments. Toshiba sold its remaining 15 percent stake in IPS Alpha in 2007 to Canon (CED Dec 27/07 p3) after striking a deal to buy 32-inch and larger panels from Sharp (CED Dec 26/07 p5). Toshiba formed IPS Alpha with Hitachi and Panasonic in 2004 to make conventional large-screen LCD panels, production of which began two years later. The venture runs a 6G plant that makes panels up to 32 inches and is expected to add 8G capacity this year.