Hitachi is set to halt production of TVs in Japan, and will convert its one remaining flatscreen manufacturing facility to making more profitable LCD projectors and semiconductor products.
The company made the announcement today in Tokyo, ending several months of speculation since it said in August last year that it was considering such a move. It cites intensifying price competition as the reason for the move – the same reason given by other companies, such as Sony and Panasonic, for the woes of their TV divisions.
Hitachi's plant in Gifu is its last TV factory in Japan, but production there is pretty small-scale by the standards of the company's rivals: it employs just 250 people, and makes around 100,000 TVs a month.
The company has of late increased the outsourcing of its TV production to countries such as Taiwan, restricting its Japanese operations to making components for the products, then buying in finished products from third-party manufacturers.
The latest announcement completes that outsourcing process, after a period where Hitachi had tried to keep the Japanese production facility profitable by buying in more parts. It has now decided this strategy has its limits, and production of TVs at the Gifu factory will end by September.
Before the change, Hitachi will transfer its TV business from its consumer electronics division to its consumer marketing operation, emphasising the point that in future it will be selling TVs, not manufacturing them.
Hitachi's move is symptomatic of the ongoing problems of the Japanese TV manufacturing business: of late both Panasonic and Sony have been downrated by investment analysts, and in both cases the losses being sustained by the companies' TV divisions have been stated as a major reason.
Deutsche Securities reduced its investment rating on Panasonic on Friday to 'hold' – the middle position on its three-step scale – saying that profitability of its TV business is declining, while Moody's lowered its long-term debt ratings on both Panasonic and Sony by one notch at the end of last week.
Moody's said its downgrading of Sony is due to 'concern that [its] earnings will remain weak and volatile due largely to its loss-making TV business', particularly due to 'intense competition and sharp price declines in the TV business'.
Meanwhile it says 'Panasonic is unlikely to restore its financial profile in a timely manner', due to continued losses from its TV division and poor earnings from those divisions – principally involved in rechargeable batteries and solar panels – formerly part of Sanyo, which the company bought in 2009.