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Sony big on local procurement

Sony president and chief operating officer Kunitake Ando interacts with a robot while presiding over the opening of Sony Fair 2004 and Sony's Taiwanese flagship store at Taipei 101 yesterday. PHOTO: FANG PIN-CHAO, TAIPEI TIMES

Sony Corp's electronics orders with domestic suppliers are expected to jump at a double-digit rate this year from a year ago, Sony president and chief operating officer Kunitake Ando said yesterday in Taipei.

The company last year sourced about NT$150 billion of components from Taiwanese suppliers, said Toshiyuki Takinaga, chairman and managing director of Sony Taiwan Ltd, at a press conference yesterday.

Ando, 62, was in Taiwan on a two-day visit to launch a Sony flagship store in Taipei. He declined to reveal the suppliers the Tokyo-based electronics giant was seeking.

But domestic media have speculated that he may meet with representatives of Sony's local suppliers, such as Chi Mei Optoelectronics Corp (奇美電子), Hon Hai Precision Industry Co (鴻海精密) and Asustek Computer Inc (華碩電腦).

Chi Mei supplies Sony with flat panels, while both Hon Hai and Asustek manufacture its PS2 game consoles.

Nevertheless, its orders to flat-panel makers are expected to grow significantly, as Sony seeks to enter the quickly growing market for liquid-crystal displays (LCDs), said George Wu (吳裕良), an analyst with Primasia Securities Co.

Sony last month officially formed a joint venture, S-LCD Corp, with South Korea's Samsung Electronics Co with a capitalization of 2.1 trillion won (US$1.8 billion).

The company is set to manufacture the world's first large seventh-generation panels.

Ando said yesterday that the new LCD plant will not cut Sony's outsourcing from Taiwan.

Sony's joint venture with rival Samsung is considered a move to regain its market share from emerging smaller competitors in the electronics industry. Sharp Corp, for example, has chipped away at Sony's market share in the flat-panel sector.

Sony in January reported sales and operation revenues of ?2.32 billion (US$22 million), an increase of 7 percent from the same quarter of the previous year. Its net income, however, decreased by 26.2 percent to ?92.6 billion in the same period.

To secure its status as one of the world's leading consumer brands, Ando said Sony embarked on a "Transformation 60" campaign in October last year, aiming to secure a consolidated operating profit margin of at least 10 percent by the end of fiscal year 2006, when Sony celebrates its 60th anniversary.

To achieve its goal, the company will increase outsourcing of non-critical operations to low-cost countries, mainly China, Ando said, adding that Taiwan would still be an important partner in terms of high-end product supplies, engineering power and human resources.

The new flagship store, in the Taipei 101 Mall, incorporates a broad selection of the Japanese company's hottest products.

"Sony will meet Taiwanese consumers' desire for the modern lifestyle experience through integrating group resources in the emerging broadband era," Ando said.

"The flagship store showcases a wide range of Sony's major product lines including home electronics, video games, music and others that are integrated by broadband Internet, which represents a new lifestyle, as well as a symbol of our commitment to Taiwan," he said.
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