Sony Strengthens Local DVD Production

Posted on December 1, 1998 
Filed Under Julian, Nikkei Electronics Asia

By Julian Matthews

Sony Corp of Japan plans to make Malaysia a major global manufacturing facility for digital video disk (DVD) players outside Japan.

Sony (Malaysia) Sdn Bhd managing director Hideo Kojima said the decision was made based on the availability of high technology skills and similar technical processes already in place in the manufacture of CD-ROM drives in the country.

The company has been assembling DVD players since October with imported parts from Japan at the factory located in Bangi, Selangor. The initial production is for the domestic market.

Increasing Local Content

Kojima said Sony Malaysia aims to eventually increase local content and produce players in Malaysia at a lower cost than in Japan. “We will start manufacturing for export to the rest of Asia, the US and Europe within the next 6 to 8 months with an output target of 60,000 units monthly,” he said.

Sony Corp currently produces 80,000 DVD players monthly at its Kisarazu plant in Chiba near Tokyo, for both domestic and foreign markets.

Kojima estimates annual global demand for DVD players could reach 10 million units by 2000. He said the company aims to capture about 30% market share in the year to March 2001.

Although the DVD video market began sluggishly two years ago, it is finally gaining market acceptance with an estimated installed base of about 1.2 million players worldwide. Major film studios are increasingly embracing the format as prices for players tumble and vendors find new and viable channels of distribution. PC vendors are also predicting the demise of CD-ROM drive in favor of the higher-capacity DVD-ROM drive.

Kojima said demand for DVD players was set to rise beyond the year 2000 after countries begin recovering from the economic crisis.

On the currency freefall and market upheavals, Kojima said that Sony Malaysia was only “slightly affected” mainly due to its dependence on the domestic market.

Sony Malaysia employs about 17,000 staff in five factories and two sales and service operations, and claims a 33% market share of the audio-visual market in Malaysia.

In a move seen as a reaction to the market downturn in consumer products, the company recently consolidated its three plants in the Prai Industrial Estate in Penang under one entity.

Managing director Y Utsunomiya of the reorganized company, Sony Electronics (M) Sdn Bhd, said the factories would concentrate on higher value-added products and shift the production of low value-added products such as floppy disk drives to China.

He said the consolidation exercise would not lead any retrenchment of its 11,000 employees in Penang but allow for flexible job redeployment. By combining its engineering resources under one management, he said the company also hoped to strengthen its technical competitiveness and enhance design capability for new digital products.

Published in Nikkei Electronics Asia, Dec 01, 1998

by Julian Matthews, Malaysian correspondent


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