Sharp concerned about tumbling TV prices

FRANKFURT - Japanese electronics maker Sharp Corp is more concerned about falling prices for flat-panel LCD television sets than it is about losing market share, the head of its European business told Reuters today.

Sharp was bumped off its spot as the world's second-biggest seller of LCD (liquid crystal display) TVs in terms of unit sales by Samsung Electronics in the second quarter, behind market leader Philips Electronics.

Sony Corp. is the biggest LCD maker by sales.

But Hans Kleis said that selling more larger LCD TVs -- for which profit margins are higher as pressure to cut prices is less than for smaller models -- was more important to Sharp than maintaining or increasing market share for its own sake.

"It is not our intention to lose market share, but you always have to see where you are strong and where you are weak," he said in a telephone interview ahead of the IFA consumer electronics trade fair that starts in Berlin later this week.

"I think we even gained market share in the bigger screen sizes," he added.

Sharp is cranking up production ahead of schedule at its newly built second plant in Kameyama, Japan -- the world's most advanced LCD panel factory -- in order to have more large-screen TVs on the shelves well in time for the end-of-year shopping season.

It currently makes 70 per cent of its LCD revenues from sets with larger screens, which it defines as 37 inches (94cm) and upwards.

Kleis said the company would show the first models produced at the new plant at IFA and would have TVs using screens from Kameyama II on sale by October. He said the plant's main output would be in 46-inch screens.

"As long as we are unique there will not be much of a price development. Only two, three manufacturers can produce in those sizes," Kleis said.

Pressure to cut prices for LCD TVs increased after the soccer World Cup in June failed to boost sales by as much as expected, and Kleis said retailers were still holding excess inventory they would need to shift in September and October.

"Of course prices are coming down, price pressure is there at the moment, but the quality aspect will help," said Kleis. "Especially in the bigger screen sizes people think more easily about buying a big screen for a lot of money."

He said that Sharp's own inventories were near normal and that the company was producing at 98 to 99 per cent of capacity.

Kleis added, however, that some manufacturers might be selling off inventory at knock-down prices.

"Dumping because of overproduction would be the only fear that everybody should have," Kleis said. "That worries me a little bit."

- REUTERS