Hitachi Exits TVs

Hitachi plans to outsource all its television production, becoming the latest Japanese OEM to exit TV manufacturing.

Which EMS company will benefit?

My money’s on — who else? — Foxconn. A year ago, Hon Hai (Foxconn’s trading name) reportedly was planning to invest in Hitachi’s Display Products Group. (Foxconn has a history of supporting the companies with which it hopes to do assembly or ODM business, and already builds TVs for Sony, Sharp and others.)

Meanwhile Flextronics, which has opened up considerable capacity by exiting the ODM PC business, does not seem to be a contender. The EMS company says it is trying to reduce its exposure to high-volume consumer electronics (along with its inherent cyclicality and margin-challenged ways).

Some of the other Taiwanese ODMs, such as Wistron and Pegatron, may be in the mix. Toshiba has history with both. Toshiba also  outsources some television production Konka Group in China.

A Sad Cure for Inventory Glut?

If there is a silver lining from last week’s devastating earthquake in Japan, it could be that component inventories will be dwindled, thus relieving the industry of a possible oversupply problem.

Many chipmakers and others are saying the quake will hurt their ability to produce and supply parts for one to two quarters. TI, Freescale and Toshiba are among those who have closed or reduced production at their Japanese factories.

Research firm iSuppli of late has been warning of possible overinventory situation, and no one needs reminding of the pain involved to drain an oversupply glut. As of Dec. 31, semiconductor suppliers held 83.6 days worth of inventory (DOI), up 5.5 days sequentially. The last time the DOI was this high was June 30, 2008, or just before the last semiconductor downturn, iSuppli says.

It’s just possible, however, that the forced shutdowns could ease some pricing pressure and concerns for a correction as assemblers burn through existing inventories.

This much is clear: spot prices for memory and certain other parts are bound to rise in the near-term. If Japan can’t bring its factories back online soon, they may even stay there.