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Hitachi outsourcing all TV assembly operations

Facing intense competition in the television market, Hitachi announced on Wednesday that it will outsource all TV assembly operations, starting as earl...

Freddie Pierce
|Aug 5|magazine6 min read

Facing intense competition in the television market, Hitachi announced on Wednesday that it will outsource all TV assembly operations, starting as early as this year, to cope with an increasingly price-competitive market.

In outsourcing its TV assembly operations, Hitachi hopes to cut costs on its Wooo and Ultravision televisions.

Japan has a dearth of television manufacturers, including Panasonic, Toshiba, Sony and Sharp, each of whom has projected weak TV sales as they struggle to compete with cheaper alternative like Samsung and LG Electronics.

“TVs are an unrewarding business with low margins and little value added,” MF Global Analyst David Rubenstein told Reuters. “Even Samsung and LG, with larger scales, are struggling with both their panels and TVs. It’s a good move to get out.”

While TVs don’t provide great returns, Japanese electronics manufacturers have stuck through their television operations because sales help promote the manufacturer’s brand. In the wake of the Japan disaster and a stagnant world market, TV sales are fast becoming a luxury option that fewer electronics manufacturers can afford.

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Hitachi began making TVs more than 50 years ago, and will keep its central Japan Gifu plant, which produces core television components. The company has already been forced to abandon its overseas TV production sites.

Hitachi had a market share of just 0.5 percent in terms of revenue on global flat-panel TVs. The company expects to sell 1.6 million units in the year to March, down from the 1.9 million sold the previous year.

The domestic TV market has shrunk considerably in a relatively short period of time. The market was over 25 million units in 2010, but that number is expected to fall to 7 million units in 2012.