Troubled Sony and Panasonic in talks to jointly develop OLED TVs

With sales of LCD television technology falling far short of expectations in the global marketplace, Sony and Panasonic (opens in new tab) are in talks to jointly mass-produce the next generation of OLED television sets.

The problem is the two Japanese manufacturing giants may already be playing catch-up with South Korean rivals Samsung Electronics and LG Electronics, according to Reuters. Both companies have plans to sell 55-inch OLED televisions by the end of this year.

OLED television receivers are as slim as four millimeters, consume less power and offer sharper images than liquid crystal display sets. Sony pioneered the technology with the world’s first OLED TV in 2007, but halted production of the $2,000 screens three years later because of the global economic downturn.

Sony still makes OLED screens costing as much as $26,000 for broadcasters and other professional users. But the much larger consumer market is the Holy Grail for the manufacturers.

Japanese companies like Sony and Panasonic have aggressively competed with their Korean rivals and the Koreans appear to be winning. That’s because a stronger yen has made their exports more expensive. Sony, Panasonic and Sharp reported a combined net loss of more than $20 billion in the year to end-March.

OLED appears to be the next big market for large screen HD television sets. IHS Research has predicted that OLED television sales will climb to 2.1 million sets in 2015 from only 34,000 this year. Being able to make low-cost OLED screens may be the next big frontier in television manufacturing.

“Overseas competitors have gotten a head start in this area and I feel like they’re stepping into this too late,” Masayuki Otani, chief market analyst at Securities Japan, told Reuters. “There’s no question OLED TVs are going to be the mainstream. The issue is price and size of the displays.

“Japanese makers haven’t been able to produce OLED TVs that are as large as Samsung’s. I think there’s an element of Japanese pride to this—the fact that Panasonic and Sony will work together to produce OLEDs to beat their Asian rivals. But I do have serious doubts on whether they can catch up,” Otani said.

H.P. Chang, head of research at Taiwan-based LCD industry research company Witview, told Reuters that a Sony-Panasonic “tie-up is to make sure they can stay ahead of the Korean rivals in terms of technology because Samsung and LG have expanded very quickly and have the capacity ready.”

Panasonic plans to invest about 30 billion yen in its Himeji plant in western Japan for a test production line of OLED panels, an industry source told Reuters, and outgoing Panasonic President Fumio Ohtsubo said last week the company was unlikely to provided all the necessary investment in OLED panels on its own.

“It’s important to reduce investment risk by finding the best partner,” he told a news conference after releasing full-year results.

The Nikkei Business Daily also reported that Sony and Panasonic were in talks on OLED technology development. Neither company had a comment on the talks.