Fujitsu exits PDP business

[Gregg Lengling]

Fujitsu Ltd, a pioneer in plasma display panel development and manufacturing, will largely exit the PDP business with the transfer of most of its assets to display partner Hitachi Ltd.

By absorbing Fujitsu Hitachi Plasma Display Limited (FHP), Hitachi intends to establish a vertically-integrated production system ranging from panels to TVs while seeking to boost its share of the PDP TV business over the next two years to 15 percent.

FHP is a 50-50 joint venture between Fujitsu and Hitachi established in April 1999. The partners said Wednesday (Feb. 2) that they have concluded the memorandum of understanding in which Fujitsu will transfer 30.1 percent of its shares in FHP and related plasma display patents to Hitachi. The stock transfer will be completed by April.

 
 

Though the two companies evenly owned FHP, the joint venture company has been treated as a consolidated subsidiary of Fujitsu. After completion of the stock transfer, Hitachi will own a 80.1 percent stake and consolidate it as its subsidiary.

Fujitsu expects an operating loss of about ¥12 billion (about $116 million) in its display business for the fiscal year ending March. Most of the loss stems from its PDP business. "The panel price eroded more than 30 percent per year. We cannot expect the market situation to improve in the foreseeable future," said Masamichi Ogura, corporate executive vice president of Fujitsu.

By contrast, Hitachi is "ramping up output and cost reduction will improve the business," said Kazuhiro Tachibana, president and CEO of Hitachi Ubiquitous Platform Systems. "To realize it, we are going to expand the PDP TV business."

According to Hitachi, the PDP TV market in 2004 totaled about 2.7 million units, just 2 percent of the world total TV market of 130 million units. "We are optimistic about the growth," Tachibana said.

A third fab is planned at FHP at a cost of ¥75 billion. Hitachi will oversee the construction project.

Hitachi will seek "to integrate the process from panel to TV set to reduce cost from both sides of the panel and circuitry," said Shunsuke Hayashi, marketing director of Techno Systems Research Co. Ltd., based here.

Hayashi said PDP TV market is growing, especially in the U.S. This year, the PDP TV market will grow to about 4 million units and PDP monitor market will reach about 500,000 units, he added.