Pioneer Officially Announces Withdrawal From PDP Production

Mar 10, 2008
Mami Akasaka, Tech-On!

Pioneer Corp officially announced March 7, 2008, that it will withdraw from PDP production. Terminating in-house production after producing panels for its next series of models, the company will start procuring these panels externally.

As the reason for the withdrawal, Pioneer explained, "We have judged that maintaining the cost competitiveness of plasma displays at projected sales volumes will be difficult going forward." Some media reported Pioneer will procure panels from Matsushita Electric Industrial Co Ltd, jointly conducting the development, but Pioneer said, "We are currently in discussions on the feasibility of procuring panel modules that may incorporate our proprietary technologies."

Ahead of its withdrawal from PDP production, Pioneer is considering reallocate part of its relevant personnel to the AV equipment business including Blu-ray Disc products and car electronics business in an effort to downsize its overall display business.

Pioneer cited goals to enhance telematics functions for car navigation systems and accelerate its shift from automobile AV devices equipped with CD players to those with DVD players.

As for the Blu-ray Disc business, Pioneer will concentrate internal product development on players, which are "expected to find growing adoption worldwide," while using joint development and outsourcing to enhance its Blu-ray lineup of recorders, Pioneer said.

The company will be supplied with LCD TVs by Sharp Corp, launching these TVs first in Europe in the fall of 2008. Pioneer aims to restore its home electronics business involving Blu-ray Disc products and flat-panel TVs to profitability in fiscal 2009 (April 2009 to March 2010).

Pioneer once aimed at the top spot in the industry.

Pioneer began the PDP production in April 1997. The company has since been increasing its presence with superior technologies, developing models with a higher contrast ratio, a smaller pixel pitch and a slimmer body, for example. Proactively boosting output from 1997 through around 2004, Pioneer made gaining the largest market share its business goal when it acquired NEC's PDP business in February 2004.

Competition in the plasma TV market became increasingly fierce around 2004 and extreme drops in price began to pressure the company's profit margin. In fiscal 2004 (April 2004 to March 2005), Pioneer logged a net loss for the first time in nine years. The company was forced to lower its PDP production plans as well.

After that, while the industry's leader Matsushita won an overwhelming share by enhancing its output capacity through large investments, Pioneer gradually reduced its PDP production. It also switched its business policy to pursue "high added-value, instead of a larger share." In October 2007, the company revealed plans to partially stop the operation of its PDP production lines and cancel the construction of a new plant it had been discussing.

According to a survey conducted by DisplaySearch of the US, Pioneer accounted for 3.2%of the global PDP (panel) shipments on a volume basis and 6.3% of the global plasma TV sales in the October-December 2007 quarter. Compared with the same period a year ago, the company saw PDP shipments and plasma TV sales decline about 40 and 30%, respectively.

Regarding the circumstances, where its high technologies are not helping sales increase, Pioneer's President Tamihiko Sudo said at the end of October 2007, "The values we are proposing aren't accepted by consumers. We are exploring what form our organization should take and trying to establish a structure where consumers can appreciate our value."