Concentrating on integrated LCD production — the “Kameyama model” (2004)

How far may concentration on a proprietary device be pushed?

The heart of this decision was to take the liquid-crystal expertise Sharp had built up since its calculator days and, wielding it as a weapon, bind everything from panel to television into a single factory — holding its manufacturing know-how behind closed doors to keep its first-mover lead for as long as possible. Vertically integrated, end-to-end production yields a strength outsiders find hard to copy. Because it coincided with the rise of a market shifting to flat-screen sets, the Kameyama model hit its mark, bringing Sharp the top domestic share and its highest sales ever. Viewed to this point, it looks like a success story in which concentrated investment in proprietary technology led straight to competitive advantage.

Yet that success carried its limits within it. The head start bought by turning the process into a black box lasted only six months to a year and a half; Korean and Taiwanese makers threw up factories of the same scale one after another and drew level with Sharp. The enclosure held only for the brief interval in which the market was moving to flat panels, and the strength that vertical integration produced held good only so long as demand grew as forecast. How large a scale would this bet be allowed to reach next — the same question of concentrating on a proprietary device would return to Sharp in heavier form a few years later, in the still more colossal investment at Sakai.