Sony to Outsource LCD TV Production to Hon Hai

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Sony plans to outsource production of its popular LCD TVs for the Americas in order to reduce costs and focus more on research and design, the company said in a statement Tuesday.

The Japanese electronics giant, which sells LCD TVs under the popular Bravia name, will turn over production of LCD TVs for the Americas region to Taiwanese contract manufacturer Hon Hai Precision Industry, which operates under the trade name Foxconn.

Hon Hai already manufactures PlayStation 3 game consoles and other devices for Sony. The Taiwanese company is the world's largest contract electronics manufacturer, making gadgets such as the iPod and iPhone for Apple, PCs for Dell and more.

Hon Hai will buy a 90 percent stake in Sony Baja California SA de CV, which is located in Tijuana, Mexico, Sony said. Sony will retain a 10 percent share.

The company did not disclose payment details. Sony employs 3,300 workers at the Tijuana company. Those workers will be transferred to Hon Hai.

"Within its LCD TV business, Sony is concentrating internal resources towards areas that contribute to product differentiation, such as R&D, engineering and design," Sony said. "At the same time, by proactively leveraging external manufacturing resources Sony will also seek to reduce fixed costs, drive other cost reductions, improve profitability and achieve business expansion."

The deal with Hon Hai is subject to review by regulators before it can be finalized.

Sony has been struggling to restructure over the past several years to lower costs and compete against rival electronic makers, including Apple, Hewlett-Packard and Samsung Electronics. In July, the company reported a first quarter net loss including declines in its main electronics businesses, blaming poor global economic conditions and the strong Japanese yen.

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