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Samsung and Sony's Win-Win LCD Venture

A manufacturing collaboration between the two tech giants is reaping big rewards in the cutthroat field of large-screen, flat-panel TVs.

One is a South Korean upstart that has really only achieved premium, global-brand stature this decade; the other is a fabled Japanese consumer electronics titan. Samsung Electronics (SSNGY) and Sony (SNE) are also fierce industry rivals with killer instincts to succeed-often at each other's expense. Still, they have pulled off one of the most interesting and fruitful collaborations in global high-tech by jointly producing liquid-crystal display (LCD) panels. And it's an alliance that is reshaping the industry.

The two companies broke ground in 2004 for the joint venture, called S-LCD, in Tangjeong, about 55 miles south of Seoul. On both sides the alliance was controversial, all the more so since Sony pulled out of a Japanese-state-backed LCD-panel development group to make it happen.

Early on, Sony also had concerns about quality. The company not only dispatched its own engineers to the joint venture to vet LCD displays, it also insisted that every panel it used be shipped through its LCD-TV factory in Inazawa, near Nagoya, Japan. There the panels went through another rigorous quality check before electronics such as digital tuners, power units, and other components were added. Only then were they packaged into TVs or shipped off as modules to assembly plants in Spain and Mexico.

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