Is the Japanese TV Business Facing Extinction?

You would be forgiven for thinking that TV manufacturers were doing pretty well. After all, for the last few years we’ve seen abundance of new products flooding the market: 3D, ultra-skinny backlit LED, 70”+ behemoths, 21:9 ratio sets and OLED is being released later this year. Despite this, all is not well in TV-land.  Several manufacturers have recently issues losses (or warnings of losses) in their TV divisions:

Panasonic warned of $10.2B loss and reduced projected shipments of TV from 19 million to 18 million sets this year.

A few days ago, Sharp announced its worst ever annual loss of $3.8b and said it will cut the output at its largest TV panel factory by 50% to reduce inventory.

Sony is predicting losses in its TV business for the 8th consecutive year.

Hitachi announced that it will stop making TV’s in its Gifu facility by September this year.

In 2011, Philips abandoned TV production.

According to flat panel industry research company DisplaySearch, annual global sales of liquid crystal TV’s will contract by 8% by 2015 and plasma will shrink by 38%. The latter not being good news for Panasonic, who are the major manufacturer in this sector.

Many of the manufacturers’ problems are caused by fluctuations in the Yen, which has appreciated by almost 25-percent in the last 3 years. This makes exports of Japanese products very expensive in relation to other countries’ products (such as South Korea). In an effort to combat this and the effect of exchange rate fluctuations, many are turning to outsourcing and contract manufacturing.

South Korean manufacturers Samsung and LG now produce about one third of all TV’s globally and will ship new OLED products later this year. Vizio has leapt to over 25%. As a result, there has been a lot of shake ups in the Japanese companies while they try and recover. With strong rumors that Apple will launch their TV in the near future, the Japanese manufacturers have little to be positive about.

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