Panasonic nears deal to outsource TV production to Chinese TCL

OSAKA – Panasonic is set to outsource TV production to Chinese rival TCL, the world’s third largest TV maker, as part of the Japanese electronics group’s latest initiative to cut costs in a segment where its brand has disappeared, Nikkei learned.

The two sides are negotiating the scope of the production contract, with Panasonic hoping to reach an agreement as early as next month.

Panasonic is following other major Japanese brands in phasing out or downsizing television manufacturing, once a major area of ​​competition for the country’s electronics industry.

Panasonic will continue to manufacture its own high-end TVs primarily for sale in the Japanese market, but the Osaka-based company will consider consolidating or downsizing its production sites in Japan and overseas.

Television production will close this financial year at factories in India and Vietnam. The development of low-end televisions, with slim profit margins, will also be outsourced to reduce expenses.

Panasonic said in 2019 it would look to partner with other companies in the TV segment to cut costs. After reviewing several major TV manufacturers, Panasonic narrowed its consideration to TCL due to the Chinese company’s strengths in sourcing and production.

Panasonic once had a global TV market share of over 10%, but has lost ground with the emergence of lower-cost Chinese competitors.

Panasonic withdrew from plasma TVs, then subsequently exited production in the United States and China. The company had a 1.8% market share last year, according to British research firm Omdia, placing it in 12th place.

It is estimated that televisions represent less than 10% of total Panasonic revenue. The segment apparently made a profit in the fiscal year ended in March thanks to a robust domestic market, but the company sees little prospect of stable, long-term profits in televisions.

Japanese rivals have undergone similar revisions. Hitachi ceased in-house production of televisions in 2012 and stopped selling televisions under its brand in 2018. That same year, Toshiba sold its television assets to the Chinese group Hisense.

Sony has put its television business on a stable footing by reducing its sales channels and product line.

Panasonic has sold its loss-making activities. The company sold its semiconductor business to Taiwanese company Nuvoton Technology and decided to exit production of liquid crystal displays and solar cells.

“We are on track to complete the structural reforms of the companies which generate heavy losses,” said a Panasonic executive.

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