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Pioneer to End Plasma Panel Output

Japan's Pioneer Corp is finalizing plans to stop all production of plasma display panels in a bid to turn around its loss-making TV operations, an industry source briefed on the plan said on Tuesday.

Shares in the the maker of audio-visual products and auto electronics surged to a four-month high after first reports of the move.

Pioneer is the world's fifth-biggest plasma TV maker, but it has been struggling to compete with larger rivals with better output efficiency such as Matsushita Electric Industrial, maker of Panasonic-brand electronics.

After it halts panel production, Pioneer plans to buy panels for flat TVs from Matsushita, the Nikkei business daily reported.

Japanese TV makers have been undergoing a realignment as top manufacturers with ample output capacity such as Matsushita and Sharp look for panel buyers, while midtier players seek ways to obtain display panels without making hefty initial investments.

A Pioneer spokesman said the company would unveil its display business strategy when it announces companywide business plans on Friday.

To fight price declines, Pioneer last year launched its "Kuro" series, positioning the TVs as premium products. Executives had said the brand was gaining momentum and would translate into bigger sales in 2008.

Pioneer aims to sell 480,000 plasma TVs in the business year that ends this month, less than one-10th of Matsushita's sales target of 5 million units.

Withdrawing from the panel business implies the firm will close its panel plant in Kagoshima in southwest Japan, but Pioneer is studying ways to avoid shutting the factory, the source said.

Pioneer has spent a little over 100 billion yen to build four plasma panel production lines and to buy two more lines from NEC Corp.

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