Under continued pressure to regain profitability, Hitachi Ltd. this week identified its Display Group as the next division to reorganize and will spin it off into a separate company in October.
In a related move, the company said the Hitachi Electronic Devices (USA) Inc. subsidiary of Hitachi America Ltd. in Greenville, S.C., will stop manufacturing and selling color picture tubes for direct-view TVs by the end of April.
The new display organization, whose name, executives, and headquarters are still unknown, will devote its full energies to developing thin-film-transistor (TFT) LCDs for PCs, large-screen LCDs for multimedia applications, and projection tubes for large-screen TVs.
The spinoff will be a wholly-owned subsidiary of Hitachi and will employ about 8,200, bringing together personnel from both the Display Group and display products sales personnel assigned to Hitachi's Semiconductor and Integrated Circuits Group and branch offices.
While a number of details need to be worked out, the spinoff is part of Hitachi's plan to focus its business in areas where it has a leadership position, according to Gerard Corbett, vice president of Hitachi America Ltd., Brisbane, Calif.
Last July, Hitachi announced it would no longer produce CRTs for PC monitors.
"The company has been moving away from the tube business for several years," said Mark Fihn, an analyst at DisplaySearch Inc., Austin, Texas.
Hitachi does have a strong position, however, in the LCD market, Fihn added, where he estimates the company ranks well among the top 10 suppliers in revenue.
Hitachi joins a growing number of Japanese display suppliers that have reorganized or spun off parts of their display operations in response to stiffening competition, particularly from low- cost suppliers in Taiwan and Korea.
Two of Hitachi's Japanese rivals, Toshiba Corp. and Matsushita Electric Industrial Co. Ltd., recently merged their LCD and CRT display operations to consolidate production resources and trim costs.
In exiting the color picture tube market, Hitachi Electronic Devices will end production of 31, 32, and 36in. direct-view color TV tubes at its Greenville plant, which will now focus on building CRT projection tubes for 42in. and larger projection TVs. The company will sell its color picture tube production equipment to Thomson Multimedia, which will in turn transfer the equipment to its other manufacturing sites.
About 270 of the plant's 1,000 production workers and support staff will lose their jobs as a result of the restructuring, according to Bill Davis, vice president and general manager of personnel administration at Hitachi Electronic Devices.
"The projection tube business is going great guns as we're getting a lot of orders. However, prices have fallen so much for
direct-view color picture tubes, we can't afford to stay in the business," Davis said.
According to Corbett, Hitachi has not yet determined if Hitachi Electronic Devices will be part of the new display group or remain a subsidiary of Hitachi America Ltd.
In the six-month period ended September 2001, Hitachi Ltd. recorded a net loss of $826.1 million on revenue of $29.4 billion.