Japan, meanwhile, has a potential rival offering - ultra high-definition sets, dubbed 4K, that boast pictures four times sharper than today's HDTV sets. Sony, Panasonic and Sharp all have this technology, but face a broadcasting infrastructure hurdle, as television stations would need to record in 4K for viewers to watch the new ultra high-definition standard.
"However, if the sets are used to view video downloaded from the Internet then higher definition could be viewed more easily," said Kazuhira Miura, an industry analyst at SMBC Nikko Securities in Tokyo, potentially giving Japan an edge in any trend for connected smart TVs.
Given that, it's too early to write off the Japanese, but they may need help to get their operations back on track.
GRAND ALLIANCE?
One option being explored is an alliance of Japan's major TV makers, brokered by the government, which would allow them to pool their R&D cash, engineering know-how and eliminate overlapping costs. Japan has already taken a step down this road, with Sony, Toshiba, and Hitachi Ltd combining their small LCD operations into Japan Display, a state-sponsored company two-thirds owned by the taxpayer.
But TVs may be a different matter.
"Creating a united maker is going to be hard," said Yoshiharu Izumi, analyst at JP Morgan in Tokyo, citing different corporate cultures and traditions and entrenched feelings of rivalry after decades of competition. "An alliance just to cut costs doesn't really make sense. Of course any tie up doesn't have to be between Japanese companies, it could be Taiwanese."
Indeed, there are signs that cooperation is picking up between Japan and contract manufacturers in its former colony of Taiwan to take on South Korea, another former colony. Taiwan's manufacturers have plants and know-how at low prices as well as a complete supply chain for LCD production.
"The Japanese need the capacity, while the Taiwanese need outlets. Japan has the technology, but may not necessarily be able to implement. So it's a match," said David Hsieh, Taipei-based Greater China market vice president at specialist research firm DisplaySearch. "Because Japan's scale is smaller, that's why it has to work with Taiwan. The added scale in TV panels will match Korea."
MORE COLLABORATION
Recent media reports have linked Sony with AU Optronics in a tie-up to make TVs, while Taiwanese component maker Hon Hai Precision Industry, which belongs to the same Foxconn group as LCD panel maker Chimei Innolux, recently became the top shareholder in Sharp and invested in its Sakai plant, Japan's most advanced LCD facility.
Taiwan's LCD industry would benefit from tie-ups with Japan through increased cooperation and outsourcing. The industry lost $4.3 billion last year, and AU is expected on Thursday to report a first-quarter loss of some $430 million.
"Taiwan doesn't have the edge in many of the technologies," said H.P. Chang, head of research at Taiwan-based specialist LCD industry research company Witview. "Even if your company wants to consolidate, others may not want to. Samsung will not sit and wait for you to grow. Taiwanese and Japanese companies need to explore ways to collaborate."
While Taiwan's government has leaned on banks to help loss-making Chimei extend its loan repayments, it takes the view that any consolidation should be led by the industry itself, though it would look at how it could help.
"I don't think Taiwan's government really wants an industry consolidation because that will create many job losses," said Samson Hung, a Taipei-based analyst for UBS.
2-3
