Pioneer bets on plasma

Consumer electronics maker Pioneer is moving ahead with plans for a giant new plasma display panel factory in Japan, as it tries to expand its share of the global market, company officials told Japanese media today.

The factory could start operating as soon as April 2007, and would help Pioneer keep its share of the plasma market at 10 per cent, the Japan Times reported – other sources suggested a later start date, however.

The new plant would eventually be able to churn out more than one million flat screen plasma TVs a year, but would not open until March 2008, the Nihon Keizai Shimbun reported yesterday, without naming the source of its information.

Some analysts, however, downplayed the importance of the announcement. “At the plasma display panel business, we note that three out of the company’s four existing production lines are not leading-edge facilities,” commented Nomura Securities, in a reaction to earlier rumours of the new plant.

“We view the latest news as a neutral factor, assuming that the new plant is mainly intended as a replacement for ageing facilities, and that the hike in production capacity will not be excessive.”

Plasma displays are already an important contributor to Pioneer's sales, generating about $340m in the most recent quarter. For the three months ended June 30, 2006, Pioneer's consolidated operating revenue increased 20.4 per cent from a year earlier to $1.66bn). This was "mainly due to higher sales of plasma displays, car navigation systems and car audio products," the company reported in an earnings release.

"Plasma display sales rose by approximately 32 per cent. This was mainly due to strong demand in Europe and North America for own-brand high-resolution models, which Pioneer is concentrating on, despite a drop in original equipment manufacturing sales," Pioneer reported.

One of Pioneer's main plasma display competitors, Matsushita, which owns the Panasonic brand, reacted with an aggressive statement of its own global expansion plans. "Demand for our plasma TVs in Europe and the US is more than twice our domestic demand. Also, there are affluent young people in Brazil, India and China," incoming president, Fumio Otsubo, told the Daily Yomiuri.

"Within several years, we'll launch products in those countries at the same time as we do in Japan, the United States and Europe. Additionally, we'll have to develop the markets and improve the image of our brand Panasonic in those countries."

A new Matsushita facility under construction could be the world's largest TV factory, with a capacity of 500,000 panels per month, Otsubo said. The company hopes to ramp production to 11.5 million sets per year by 2009. Matsushita currently holds 35 per cent of the global plasma display market, according to company data.