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Panasonic to cut TV factory investment

(Agencies)
Updated: 2009-01-09 16:06

TOKYO _ Panasonic Corp. will slash its planned investment in factories that make flat-screen TVs as demand for high-end electronics falls globally, news reports said Friday.

Customers look at Panasonic television sets at an electronic shop in Tokyo November 27, 2008. Panasonic Corp cut its annual net profit forecast by 90 percent, hit by a slowing economy and a firmer yen, missing market expectations and joining rivals such as Sony Corp in slashing its outlook. [Agencies]

The electronics giant is set to cut about 100 billion ($1.1 billion) from its previous investment target of 580 billion in two new TV panel factories in Japan, Kyodo News reported.

As TV sales have fallen below targets, the company has decided that increasing capacity to previously planned levels would lead to excess capacity, according to broadcaster NHK.

A Panasonic spokesman declined to comment on the reports, saying the company had made no official announcement. The company was due to have a press conference Friday evening in Tokyo to discuss its business strategy.

Panasonic is one of the world's largest TV makers. The company makes flat-screen TVs based on both plasma and liquid crystal display technology, and is ramping up production to keep up with domestic rivals such as Sharp and Sony.

As tough competition drives down the price of TVs, manufacturers have poured funds into their production capacity to leverage economies of scale. But that strategy can backfire if overall sales decline.

Panasonic is also in the midst of a $9 billion takeover of Japanese rival Sanyo, hoping that transforming into one of the world's biggest electronics companies will help it weather the current tough business environment.