Pioneer to Cease Plasma TV Production

As widely anticipated this week, Pioneer Electronics has formally announced it is restructuring its display business (PDF), abandoning in-house production of plasma displays and shifting to building plasma HDTVs based on panels from another manufacturer, most likely Panasonic (née Matsushita). Pioneer also plans to expand its well-regarded Kuro line of high-end flat screen displays to LCD technology, using panels purchased from Sharp. The first Kuro LCDs should hit European retailers "this fall." Sharp and Pioneer are also planning to work together to expand their Blu-ray player and recorder lines, as well as work together to link Sharp’s Aquos mobile phone concept technology with Pioneer’s car navigation systems.

The announcement comes as Pioneer reveals it expects to post a loss for the fourth straight year, expecting to lose ¥15 billion (about $145 million) for its fiscal year ending March 31. Previously, the company had said it expected a ¥ 6 billion profit for the year; the estimated loss for the current year takes into account ¥19 billion to write down the value of its plasma business.

Pioneer hopes that by eliminating plasma production and tightening its alliance with Sharp, it can cut back on its production costs and refocus on marketing and design. "This move will allow us to transform our business model for displays from vertically integrated, capital-intensive operations to a leaner business model geared to making value-added product proposals," the company said in a statement.

Plasma production will cease in 2009, In the meantime, Pioneer plans to continue producting plasma and Kuro products. The company says it belives it will be able to maintain the quality of its plasma offering using outsourced panels, and points out that many "respected brands" do not manufacture their own products.

Pioneer had invested heavily in plasma display technology, putting more than ¥ 100 billion into four plasma production facilities of its own as well as the purchase of two plasma facilities from rival NEC.

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