Sharp-Pioneer deal: Realigning Japan’s consumer electronics supply chain
Osaka-based Sharp Corp. Thursday announced it will take a more than14 percent stake in its competitor Tokyo-based Pioneer, a move that calls attention to the current realignment of Japan’s consumer electronics supply chain.
Not only is Japan’s electronics industry crowded, its companies directly compete, selling similar consumer-focused products. Take a walk down your local Best Buy TV isle and you’ll see flatscreens from not only Sharp and Pioneer, but Sony, Panasonic (Matsushita) and Hitachi, too. The end result is capped growth and revenue and minimal supply-demand leverage when it comes to pricing.
In turn, some of Japan’s electronics makers have drifted from their core competencies in search of growth opportunities, only to find themselves competing with a whole new set of companies outside of Japan in product areas they are unfamiliar with. Witness this correction, as players like Sony and Matsushita have made efforts in recent months to return to their consumer electronics roots.
The Sharp-Pioneer agreement — one that will see Sharp take on some $357 million in new Pioneer stock and become Pioneer’s largest shareholder, by the way — aims to primarily conserve on funds, personnel and time as each company tries to stay competitive and expand its end-product portfolio in the cost-conscious consumer electronics world.
If the Sharp-Pioneer deal works, however, is still to be seen. Sharp, a company that has posted record financials in recent years, is one of the world’s largest LCD TV makers. Pioneer, a company that has seen mounting losses and that has struggled to keep its head above water in Japan’s competitive supply chain, is best known for its audio systems and plasma TVs. Together, the two will work on next-generation DVD players, audio-visual products, car electronics and home networking products.