Pioneer to acquire NEC's PDP manufacturing business

Pioneer has reached a tentative agreement with NEC to acquire its Plasma Display Panel (PDP) design and manufacturing business and all of its related intellectual property.

The companies have signed a memorandum of understanding covering the deal, which is expected to see NEC transfer its wholly-owned subsidiary NEC Plasma Display to Pioneer for about $US378 million.

NEC Plasma Display is headquartered in Tokyo and operates one factory in Kagoshima prefecture, Japan.

It employs about 1100 people and expects sales for the current fiscal year, the period to the end of March, to be around $US474 million. The two companies said full details of the transfer, including the price and transaction date, were yet to be decided and would be announced at a later date.

While best known around the world for its audio products, Pioneer is a major manufacturer of PDPs and finished monitors based on the panels. The acquisition of NEC's PDP business will make the company one of the leading players in the industry.

The market for PDP-based products, which includes flat-screen televisions and public sign boards of about 40-inches in diagonal measurement and larger, has been growing rapidly in the last few years.

Worldwide shipments of PDP-based products more than doubled last year to 1.1 million, according to estimates released in January by IDC. Looking ahead, IDC expects that the PDP market compound annual growth rate between 2003 and 2007 will be 70 per cent and that the market will see shipments of 9.5 million units in 2007.

Market leader in terms of shipments of finished products to consumers is Japan's Matsushita Electric Industrial, which had a 17.8 per cent share in the first half of 2003, according to IDC's estimate.

South Korea's Samsung Electronics was placed second with an estimated 15.6 per cent share and Japan's Sony was in third place with 13.3 per cent of the worldwide PDP market, IDC said.

Pioneer had a market share of 10 per cent and was ranked fourth by IDC.

On the manufacturing side of the business, many major Japanese consumer electronics companies produce PDP panels and have recently seen increased competition from overseas rivals such as South Korea's Samsung Electronics and LG Electronics.