Sharp to Close Subsidiary: Sharp Electronics, Taiwan

On November 16, 2007, Sharp Corporation announced that it has decided to shut down its Kaohsiung, Taiwan-based subsidiary, Sharp Electronics Co. laying off 396 local employees by March 2009 when those jobs move to China. This announcement is nothing new as Sharp closed its Taipei-based R&D center in August 2007. Laying off employees, however, is something new and the employees were shocked by the parent company’s sudden decision. Sharp Electronics Co. was founded in 1986 and modularized TFT LCDs. Because the module process is labor intensive and price pressures have been intense, to say the least, most LCD companies have already set up module shops in China.

Does moving to China solve the problem of labor intensive work? Time will tell, but I doubt it. China’s labor rates are increasing and to shift an entire operation to China is costly. The best move would have been to focus on R&D to modify the module design to depend less on cheap labor. Another reason why moving to China might not be a good move is that consumer sentiment is shifting: Made in China means cheap, but also terrible quality that may lead to a negative impact on health. Lead paint in children’s toys, exploding automotive tires, toxic materials in textile, food, etc. are just some recent reasons why.

The Taipei Times reported that the US sub-prime mortgage crisis may lead to a decline in demand for LCD panels because LCDs are viewed as luxury products. I’ve got news for you Taipei Times: LCD products are not luxury products. LCDs are included in everything from cheap mobile phones, notebook PCs, LCD monitors, LCD TVs, etc. Some of these products are being used by average consumers and are priced in a range that would not be regarded as luxury by any decent market research firm or news agency. During Black Friday, expect to see $399 32″ LCD TVs for sale, a luxury price it is not.

Back to Sharp: “Sales of LCD TVs that are 40 inches and above have declined dramatically since mid-July,” Sharp Japan president Mikio Katayama said. I would think the best selling sizes would have been 32″ and 42″ LCD TVs for Sharp.

Source: Taipei Times

[tags]China, LCD Module, LCD TV, Sharp Electronics, Sharp[/tags]

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