Sony has announced today that it has signed a “memorandum of understanding” with one of its erstwhile arch rivals, TCL, to set up a new global joint venture set to encompass the entirety of Sony’s home entertainment products business.
According to Sony’s statement, the new joint venture it and TCL have agreed to establish would handle “the full process from product development and design to manufacturing, sales, logistics and customer service for products, including televisions and home audio equipment.” A state of affairs that becomes even more eye-opening when you realise that the joint venture will operate under an arrangement where TCL will have the majority shareholding: 51% to Sony’s 49%.
So what’s in this for Sony. According to Sony’s own statement, which feels like it was released to give the Japanese brand control over the narrative before the story perhaps broke independently, establishing the joint venture with TCL will “advance its business by leveraging Sony’s high-quality picture and audio technology cultivated over the years, brand value and operational expertise including supply chain management, while utiliizing TCL’s advanced display technology, global scale advantages, industrial footprint, end-to-end cost efficiency, and vertical supply chain strength.”
There’s a lot to unpack there – not least how striking it is to see a once all-conquering AV brand like Sony sharing analysis of its own heritage with not just fulsome acknowledgement of the enormity of a relative newcomer’s manufacturing capacities, global reach and economies of scale, but also heralding TCL’s “advanced display technology”. In essence, though, the joint venture appears to be an attempt to keep Sony in an AV game it might otherwise struggle to survive in without sharing the financial burdens of its R&D and manufacturing and/or formally securing a ready supply of components – including, especially, TV panels – at potentially more controllable prices in a world where such supply channels appear to be particularly volatile.
A comment on the agreement by Sony Corporation’s Representative Director, President and CEO, Kimio Maki, also provides another hint as to what’s going on: “We are pleased to have reached this agreement with TCL for a strategic partnership. By combining both companies’ expertise, we aim to create new customer value in the home entertainment field, delivering even more captivating audio and visual experience to customers worldwide.” The italics there were added by me, to highlight the apparent hopes that this joint venture will enable Sony home entertainment products to become more price competitive.
The Sony brand lives on
Sony is keen to stress in its press statement, too, that products released through the planned joint venture would still carry the Sony brand name, with the TVs additionally still also carrying the famous Bravia sub-brand. The Sony statement concludes on a further positive tone by saying that both “Sony and TCL are committed to strongly supporting the sustainable growth of the new company.”
DU Juan, Chairperson of TCL Electronics Holding Limited, meanwhile, has this to say of the new planned joint venture: “We believe that this strategic partnership with Sony represents a unique opportunity to combine the strengths of Sony and TCL, creating a powerful platform for sustainable growth. Through strategic business complementarity, technology and know-how sharing, and operational integration, we expect to elevate our brand value, achieve greater scale, and optimise the supply chain in order to deliver superior products and services to our customers.”
Product impact
This announcement raises all kinds of questions about the potential impact on the products of both the Sony and TCL brands going forward. For one thing, I can’t help but wonder if Sony will continue producing OLED TVs down the line given that Sony doesn’t manufacture its own core OLED panels and TCL currently exclusively produces LCD TV displays. Maybe TCL’s development of inkjet printed OLED displays will become a viable consumer proposition sooner than expected, or maybe the joint venture terms won’t prohibit Sony’s procurement of OLED panels from other manufacturing brands.
More clarity on exactly what we might expect from the joint venture will likely appear when its “defining binding agreements” are fully agreed – something Sony currently predicts should happen around the end of March, ahead of the new company commencing operations by the spring of 2027.
Not repeating history?
I can’t help but remember when Pioneer’s TV division struck a somewhat similar (at least in tone) deal with Panasonic back in 2009, when the former brand was struggling to achieve the economies of scale required to compete commercially with its much-loved plasma TVs. Only for the Pioneer brand to disappear from the TV world entirely within a year or so.
Sony is of course a vastly bigger entity than Pioneer was, though, and both parties appear to be talking enthusiastically enough about each other to raise hopes that this really will ultimately prove to be a key step in ensuring the longevity of the Sony brand rather than, well, a stumble towards the unthinkable alternative.
Keep an eye on my Forbes Channel in the coming weeks and months for more details on exactly how the new joint venture will work – as well as more details on Sony and TCL’s AV products for 2026.
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