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Electronics

Panasonic nears deal to outsource TV production to China's TCL

Output to end in India and Vietnam as Japanese brand moves to restore profitability

Panasonic TVs on display at a store in Tokyo. The Japanese company sees great potential in China's home appliance market.
Panasonic TVs on display at a store in Tokyo.   © Reuters

OSAKA -- Panasonic is poised to outsource production of televisions to Chinese rival TCL, the world's third-largest TV maker, in the Japanese electronics group's latest move to cut costs in a segment where its brand has faded, Nikkei has learned.

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

Panasonic follows other leading Japanese brands in ditching or scaling down TV manufacturing, once a major field of competition for the country's electronics industry.

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

TV production will end this fiscal year at factories in India and Vietnam. Development of low-end TVs, which have slim profit margins, will be outsourced as well to cut expenses.

Panasonic said in 2019 that it would seek tie-ups with other companies in the TV segment as a way to cut costs. After considering multiple major TV manufacturers, Panasonic narrowed its consideration to TCL because of the Chinese company's strengths in procurement and production.

Panasonic once held a global TV market share above 10% but lost ground with the emergence of lower-cost Chinese rivals.

Panasonic pulled out of plasma TVs, then later exited production in the U.S. and China. The company had a 1.8% market share last year, according to British research company Omdia, putting it in 12th place.

TVs are estimated to account for less than 10% of Panasonic's total revenue. The segment apparently turned a profit in the fiscal year ended in March thanks to a robust domestic market, but the company sees little chance of stable, long-term earnings in TVs.

Japanese rivals have undergone similar overhauls. Hitachi ended in-house production of TVs in 2012 and stopped selling TVs under its brand altogether in 2018. That same year, Toshiba sold off its TV assets to China's Hisense Group.

Sony meanwhile put its TV business on stable foundation by slashing its sales channels and product lineup.

Panasonic has been divesting loss-making operations. The company sold its semiconductor business to Taiwan's Nuvoton Technology and decided to withdraw from producing liquid crystal displays and solar cells.

"We're on track to complete structural reforms of businesses that generate large losses," said a Panasonic executive.

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