TOKYO – Pioneer Corp. will stop making plasma display panels in an effort to turn around its money-losing business, the Japanese electronics maker said Friday.
Pioneer plans to procure the panels, used in flat-panel TVs, from another company.
It said it was in talks with Japanese rival Matsushita Electric Industrial Co., which makes Panasonic products, to purchase plasma display panels.
Pioneer used to be one of the leading developers of the technology but has fallen behind bigger companies like Matsushita and South Korea's Samsung Electronics Co. and LG Electronics Inc.
"We have judged that maintaining the cost competitiveness of plasma display panels, or PDPs, at projected sales volumes will be difficult going forward," Pioneer said in a statement.
Pioneer is sinking into the red for the fiscal year ending March 31, racking up a 15 billion yen ($145.6 million) loss for charges for restructuring its PDP TV business. It had previously forecast a 6 billion yen ($58 million) profit.
The decision to pull out of plasma TV panel production will chalk up a one-time cost of 19 billion yen ($184.5 million). But Pioneer said it will return to profit for the fiscal year ending March 2010.
J.P. Morgan analyst Yoshiharu Izumi said Pioneer's strategy to focus on high-end electronics products, which he dubbed "the Gucci approach," largely failed because consumers weren't willing to pay a premium for such products.
Last year, Pioneer announced a capital and operations tie-up with another electronics maker, Sharp Corp., for Pioneer to procure Sharp's liquid crystal displays — the other major technology for flat TVs.
Pioneer said that partnership was going well. Pioneer is helping develop acoustic systems for new flat TVs, and will launch new LCD TVs in Europe this fall and steadily expand its lineup, the company said. Pioneer and Sharp will also work together on Blu-ray disc recorders and players, it said.
Pioneer's decision is just the latest shake-up in Japan's flat-panel business.
Last month, Sony Corp. and Sharp said they are tying up, with Sony investing in a Sharp plant for making liquid crystal displays. Sony already buys LCD panels from Samsung, and the deal with Sharp was on top of that.
In December, Matsushita, Hitachi Ltd. and Canon Inc. announced a tie-up in their liquid crystal display businesses, shortly after Toshiba Corp. said it will team up with Sharp to buy LCD panels for Toshiba flat-panel TVs.