Canon, Toshiba form joint venture on SED TVs

Canon and Toshiba will establish a joint venture next month to manufacture and market panels for large TVs using SED (Surface-conduction Electron-emitter Display) technology, the two companies said on Tuesday.

In a related move, Toshiba will phase out production of plasma display televisions in 2007 as the joint venture begins mass production with SED technology, Toshiba President and Chief Executive Officer (CEO) Tadashi Okamura said in an interview.

The new company, called SED, will launch in mid-October and begin production of about 3,000 50-inch or bigger-sized panels per month in August 2005. Volume production of 15,000 panels per month will start in 2007, according to Shunichi Uzawa, designated director and group executive of the new company, which will be based in Hiratsuka, Japan, west of Tokyo.

Canon and Toshiba will initially invest YEN 20 billion (AU$250 million). Canon will own 50.002 percent of SED and Toshiba 49.998 percent, the companies said in a statement. Canon and Toshiba will invest a further YEN 180 billion (AU$2.3 billion) between the end of 2005 through 2006 to ready the company for mass production, Uzawa said at a press conference.

By the end of 2007, SED aims to produce about 75,000 panels a month, with sales of YEN 30 billion (AU$389.5 million) for the year, according to Uzawa. By the end of the decade, the company expects to be profitable with sales of YEN 200 billion (AU$2.6 billion).

"By 2010, we want to be producing about 3 million panels per year, and if I have to put a figure on it, we want a 30 percent market share of global TV sales for 40-inch and bigger TVs by that time," he said at a news conference.

TVs and displays could be made under the Toshiba brand, but Canon is considering buying TVs assembled by Toshiba and selling them itself, possibly under the Canon brand, Uzawa said.

The announcement is the second major move in two weeks by heavy-spending Japanese companies eager to corner the market for flat-panel televisions and displays of all sizes as demand for digital and high-definition televisions (HDTVs) expands globally after 2006.

On August 31, Toshiba, Matsushita Electric Industrial and Hitachi announced a AU$1.4 billion joint venture investment in Hitachi Displays to begin mass production of 26-inch to 32-inch LCD (liquid crystal display) panels. That company intends to expand its output to reach the equivalent of 2.5 million 32-inch TV LCD panels after October 2008. Sony and Samsung Electronics' S-LCD joint venture plans to begin mass production of large-size panels from a factory in South Korea in the first half of 2005.

High-definition digital terrestrial broadcasting, which is currently available in Japan and the U.S. and slated for launch in China by 2008, and an expanding market for next-generation DVD technologies will push demand for flat panel TVs, said Toshiba's Okamura. Internal forecasts conducted by Canon and Toshiba estimate that global demand for displays of 40 inches or bigger will rise from about 1.5 million units this year to 8.5 million units in 2008 and 12 million units in 2010.

"As digital television and HDTV broadcasting expands, people will need high-quality screens that will reflect the quality of the broadcasts," Okamura said.

SED technology offers a superior picture to LCD and plasma displays, but uses between half and one third of the power that LCD and plasma panels, according to Canon and Toshiba. The technology is a combination of CRT (cathode ray tube) and LCD technologies. As with CRTs, electrons hit a phosphor-coated screen to emit light. But instead of being shot out of a gun, electrons are drawn out of an emitter through a slit that is only a few nanometers wide. A nanometer is one-billionth of a meter.

The result is a picture that is as bright as a CRT and does not have the slight time delay sometimes seen in pictures that have rapidly moving images, the companies said. In a demonstration of 36-inch SED, plasma and LCD TVs set side-by-side, the SED picture was noticeably brighter and crisper, and images of fast-moving objects lacked the slight blur seen on the plasma and LCD screens.

Toshiba and Canon began joint development toward commercializing SED technology in 1999. Canon started researching the technology in 1986, but lacked CRT, semiconductor chip and other essential circuit technologies to produce TVs, according to Fujio Mitarai, president and CEO of Canon. SED technology can be used for panels of many sizes including those larger than 60 inches, he said.

After Toshiba phases out plasma TV production, any sets larger than 32 inches will include SED technology, while TVs with 26-inch to 32-inch screens will feature LCD technology, Toshiba's Okamura said. The company intends to sell SED-based TVs at about the same price as LCD and plasma TVs of similar sizes.

"When U.S. and European customers see the quality and clarity of SED, we are sure demand for our televisions will increase significantly," Okamura said.

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