Sony Corp president Ryoji Chubachi warned yesterday that stagflation — slowing economic growth and quickening inflation — in the US, Europe and Japan is beginning to undermine consumer demand in Asia.
“This is the reality we are facing. Our concern is that consumers’ buying power is decreasing.” Chubachi said at a news conference in Singapore at the opening of a lithium-ion battery plant, its first battery factory in Southeast Asia.
“If this situation continues long-term, it would affect Sony,” he said.
Sony said last month its April-to-June profit plunged by about half from a year ago, in part because of slowing electronics sales growth.
Chubachi said demand for Sony televisions jumped ahead of this month’s Olympic Games in Beijing, and that the Tokyo-based electronics giants’ computers, appliances and mobile phones also remain popular.
Sony invested S$150 million (US$106 million) in the Singapore plant, which will produce 8 million battery units a month for mobile phones by 2010 and employ 500 workers.
Rechargable lithium-ion batteries, now common in cellphones and laptops, produce more power and are smaller than nickel-metal hydride batteries.
The factory is part of a US$370 million expansion to boost Sony’s battery production by 80 percent to 74 billion units a month by 2011. It is also Singapore’s first lithium-ion battery plant.
“Sony would like to address the needs of this drastically expanding market to establish a leading position,” Chubachi said.
In Singapore, Sony also manufactures components such as lens, magnetic devices and power supply units. It also has a research and development center.
Chubachi said the company plans to continue working on its mobile-phone venture with Ericsson AB.
“We will continue to work on the Sony Ericsson joint venture,” Chubachi told reporters in Singapore yesterday at the factory opening.
Chubachi, who was responding to a question on whether the Tokyo-based company planned to sell its stake in the venture or buy out Ericsson, declined to elaborate.
Sony may consider the future of its Sony Ericsson Mobile Communications Ltd venture, Die Welt reported in the preview of an article to be published yesterday, citing Sony chief executive officer Howard Stringer.
“It’s never easy to buy out a partner,” Stringer said, the Berlin-based newspaper reported.
Stringer said Sony and Ericsson have to cooperate like they did two years ago, or the joint venture will have to look for its own solution, Die Welt said.
Sony Ericsson on July 18 reported second-quarter net income plunged to 6 million euros (US$8.9 million), from 220 million euros a year earlier, because of falling sales of higher-priced phones and product delays. The London-based company earlier this year lost its fourth spot in the global handset market to LG Electronics Co.
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