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Pioneer May Exit Plasma Production

According to reports from Japan, Pioneer is finalizing plans to halt production of plasma display panels (PDP) as early as this year due to strong competition and will focus instead on assembling finished television sets.

Instead of continuing to make its own panels, a Reuters report said Pioneer is negotiating to procure plasma panels from Matsushita Electric Industrial (Panasonic), which is the global market share leader in the technology.

The news isn’t that surprising since a number of manufacturers have scaled back plasma-panel production for the past several years as LCD screens have become bigger and cheaper to produce. At the same time, Pioneer’s Kuro sets have seen significantly higher prices than many competitors.

In addition to Pioneer’s much ballyhooed Project Kuro deep-black plasma technology, Panasonic has made strides in black-level performance, and the three Japanese PDP makers — Matsushita, Pioneer and Hitachi — have worked cooperatively on plasma advances to reduce panel power consumption while improving various performance attributes.

Undoubtedly, Pioneer will continue to add to its edge through the integration of panel-driving components and video-processing technologies, and, perhaps, with Panasonic’s manufacturing wherewithal, Pioneer will be able to produce sets that are more competitively priced than today.

But if this news is true — and reports say that Pioneer is expected to make an official statement Friday (they hadn’t responded to my queries for comment as this was posted) — it is hard to ignore the trend.

Remember, Fujitsu, NEC and Mitsubishi all left plasma panel production several years earlier for very similar reasons. In addition, LG, which along with Samsung represent the Korean plasma panel makers, shut its A1 plant, although that was said to be a step toward increasing unit production.

Today Fujitsu and Mitsubishi are out of the plasma business altogether, and NEC has an ample LCD and projector business.

A Nikkei report said Pioneer will continue research and development in plasma and will assemble and sell finished plasma HDTV sets. It is also expected to add LCD TVs in smaller screen sizes as early as this summer through a previously announced business relationship with Sharp.

But I also won’t be too surprised if that Sharp/Pioneer LCD venture ends up becoming a bigger deal than either company has thus far let on.