DUBAI — Hitachi, Japan's second-biggest plasma television maker, is gearing up to grab a bigger share of the global flat panel television market with a significant capacity expansion and a strategic manufacturing tie-up with rival manufacturers.
According to the Tokyo-based electronics giant, the global demand for both LCD and plasma TV markets will considerably grow in the next three years — recording an 81 per cent increase in demand for plasma TV units and a projected 170 per cent increase in demand for TV units of 50 inches and over.
To meet this demand surge, Hitachi has boosted its strategic alliance with Matsushita Electric Industrial Co. while taking steps to increase plasma panel production capacity from 3.6 million units to four million units per year, a Hitachi spokesman said during a tour of its factores in Kuala Lumpur and Miyazaki, Japan.
For FY2007, Hitachi, now the world's fourth largest plasma panel display (PDP) manufacturer, set a target of a 13 per cent plasma TV global market share and a 20 per cent market share of plasma TV units of 50 inches and over.
To support its future growth strategy, Hitachi has been improving its production efficiency and focussing on profit-driven management. To improve Supply Chain Management and to reduce costs, the company aims to move from a three-plant production framework to five plants worldwide. In October 2006, Hitachi invested about 8 billion yen to build a flat- panel television factory in the Czech Republic.
Matsushita is the world's third-largest maker of plasma panels behind Samsung SDI and LG Electronics. Hitachi became No. 4 after it carried out a plan to increase its stake in Fujitsu Hitachi Plasma Display, the joint venture with Fujitsu, to 80.1 per cent. However, from this month onwards, Hitachi is halting production at its second PDP plant to focus production on its more modern third plant, which opened in late 2006. The second plant produces 37-inch, 42-inch, 55-inch and 60-inch PDPs. The closure of the plant is in favour of the more efficient third plant, which produces 42- and 50-inch PDPs. Both plants are located at the company's Miyazaki Works.
The spokesman said Hitachi plans shipments of 2.5 million PDP TVs for fiscal 2008 (April 2008 to March 2009). The third plant was said to be "well capable" of supplying as many PDPs as necessary to meet the goal.
As a result of the production halt at the second plant, Hitachi said it will incur $130 million loss. The company lowered its net income estimate for the April to September 2007 term by $86 million, but maintained its consolidated sales estimate of $42.6 billion (3.8 per cent year-on-year growth) and an operating income estimate of $775 million (a 354.5 per cent increase). Hitachi said it now expects a net loss of $301 million.
As part of its move to boost PDP capacity, in May 2007, Hitachi and Matsushita announced that they have agreed to strengthen their partnership in the plasma TV business. Under the agreement, the two companies will supply each other with plasma display panels.
The new plasma agreement is an extension of an R&D, production, marketing, and intellectual property arrangement between the two companies reached in 2005. The agreement announced in May this year, focused on strengthening the partnership by deepening the cooperation to include the cross-supply of 103-inch and 85-inch plasma panels.
The Hitachi-Panasonic deal came amid a steep decline in prices for flat-panel televisions and computer displays that has eroded profits for many of the companies that make them. Fierce competition from Korean manufacturers like Samsung Electronics has helped drive down the prices for some flat-panel TV's as much as 40 per cent over the last year.
The agreement calls for Panasonic to supply Hitachi with 103-inch plasma panels in fiscal 2007. In return, Hitachi will start to supply Panasonic with 85-inch plasma panels in fiscal 2008.