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Sony’s planned TV spin-off to boost Chinese rivals

Publication Date : 10-02-2014

 

Sony’s planned restructuring of its key television business will allow Chinese flat-panel TV makers to buy some time to catch up to Samsung Electronics and LG Electronics, analysts and industry sources said.

Japan’s biggest electronics company, which led in the analog age with innovative consumer products such as the Walkman and Discman, announced last week that it would spin off its ailing TV unit and sell off the PC business.

The move comes after years of steep losses, and Sony is now seeking to concentrate on mobile products by offsetting its dwindling TV and PC businesses, taking them off its books through the restructuring.

The plans, which were received in a positive light by analysts and consequently spurred Sony shares, are unlikely to benefit Korean players such as Samsung and LG Electronics, currently the world’s top two TV sellers.

Rather, it would be a boost for the Chinese players. This is mostly because the gap between Koreans and other Japanese companies including Sony, Sharp and Panasonic has already been widening in the global markets.

“It would be hard to expect domestic companies to gain (from this latest move by Sony) in the near term as Sony has already been losing its global share significantly over the past years,” said Lee Min-hee, an analyst at I’M Investment & Securities.

Chinese TV players such as TCL, Skyworth, Hisense and Changhong will likely take this opportunity to catch up with Samsung and LG, while Sony restructures and spins off its TV unit by 2015, analysts said.

Korean TV makers, mainly Samsung and LG, lead the global market with a combined share topping 42 per cent, followed by Japan’s 20 per cent and China’s 19 per cent in the third quarter of last year, according to DisplaySearch.

Sony had a 7 per cent market share, followed by TCL’s 5.6 per cent in the same period.

Other data by I’M Investment showed that the China-based TCL had already overtaken Sony in the global markets, where the Japanese giant fell to fourth place with a market share of 5.9 per cent and the Chinese player rising to third with a 6.4 per cent share.

“We will continue to see China, backed by state support, rapidly rising in the tech world as Korea had caught up with and surpassed Japan,” said an industry source.

Sony’s new TV entity is expected to focus on developing and marketing ultrahigh-definition TV, but analysts said it would still face uphill battles as Korea and China are also competing fiercely in the high-end sector.

 

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