Just days after unveiling a Sony-branded Internet TV with Google, Sony's chief executive is set to meet rival Samsung Electronics, for possible alliances, as the Japanese consumer electronics maker aims to turn its TV business profitable with aggressive sales targets.
Monday's closed-door meeting between Sony CEO Howard Stringer and Samsung's Lee Kun-hee, is the first since Lee returned as chairman of the South Korean technology powerhouse in March.
Sony has described this one of its regular and traditional discussions with flat-screen partner Samsung.
The meeting is widely seen by analysts as a move by Sony to address tight LCD supplies for TVs, but Samsung may also seek alliances with Sony to set up a common standard in 3D technology, the next big thing that many electronics firms are betting on.
It's mainly aimed at Sony rebuilding and consolidating its relationship with Samsung because its strategy of diversifying panel suppliers to the likes of Sharp has failed to ensure smooth supplies, said Ricky Seo, an analyst at KB Investment & Securities.
So, it's like Sony coming back for more cooperation as it needs Samsung to meet its aggressive promotion of TV business, especially to get advanced panels for 3D TV production.
Since returning to the helm of Samsung Group's crown jewel in March, Lee, 68, has unveiled a record $16 billion investment plan including $4.2 billion in LCD, and Samsung's first chip line construction in five years.
Lee had stepped down nearly two years ago after being convicted for tax evasion but was later pardoned by the South Korean president.
Sony has had a LCD joint venture with the Korean firm since 2004. Last year, it however announced a separate venture with Japan's Sharp with 68 billion yen ($756 million) investment plans to take a one third stake by next year.
This reflected Sony's growing need to secure stable panel supplies to tap a booming flat-screen TV market set to growing 24 percent this year to 180 million units, according to research firm DisplaySearch.
Sony and Samsung could talk about setting up another LCD production line. But there is an outside chance they could be reviewing the strategic value of their panel ties, said Koichi Hariya, an analyst at Ichiyoshi Research Institute in Tokyo.
Samsung, the No.1 maker of memory chips and LCD panels, said Lee and Stringer's meeting was personal and declined further comment.
South Korean media said Sony Executive Deputy President Hiroshi Yoshioka, Samsung CEO Choi Geesung and its chairman's son and COO Jay Y. Lee would also attend the meeting to discuss smooth panel supplies for Sony as well as cooperation in 3D TVs.
Shares of Samsung, which boast a market value of around $110 billion, more than three times Sony's market capitalization, ended up 0.3 percent and Sony closed 0.4 percent lower.
TRADITION WITH A PAL
Sony and Samsung compete in many areas such as TVs, cellphones, laptops and digital music players but the Japanese firm is also the biggest buyer of Samsung's LCD displays for TVs.
We meet all the time because we have a joint venture. We are pals. So we get to negotiate or discuss the joint venture a lot, and it was one of those meetings, Stringer told Reuters in a sideline last week in San Francisco.
It's a traditional meeting... But it was not a big meeting, it's a regular meeting.
Ensuring smooth supplies of LCD panels is key for Sony to turn its TV business profitable for the first time in seven years this year and to boost its Bravia flat TV sales by 60 percent to 25 million units in the year to March 2011.
Global shipments of LCD TVs jumped 50 percent in the first quarter to 40.6 million units from a year ago, but Sony's market share slipped to 9.2 percent, trailing Samsung with 18.3 percent and LG Electronics with 12.7 percent, according to DisplaySearch.
(Additional reporting by Paul Thomasch and Franklin Paul in SAN FRANCISCO)