Friday, December 21, 2007

Toshiba and Sharp in LCD alliance

Japanese electronics rivals Toshiba and Sharp are tying up in the liquid crystal display business, company officials said Friday, the latest development in the intensifying competition in flat-panel TVs.

At a joint news conference at a Tokyo hotel, the presidents of the two companies said Toshiba will purchase LCD panels from Sharp. In turn, Sharp will buy more computer chips for use in LCDs from Toshiba as part of the expanded partnership.

Speculation has been growing recently that Japanese electronics makers will need to join forces in the panel business to compete against each other and formidable rivals such as Samsung Electronics Co. of South Korea, Taiwan makers and others.

The biggest players now in LCDs include Sharp, Samsung, which has a joint venture with Sony, and Hitachi.

Recent media reports have said that Hitachi (HIT) will drop out of LCD panel production by selling its stake in a joint venture it has with Matsushita Electric Industrial Co., which makes Panasonic brand products.

Matsushita Electric (MC) has been eager to expand its LCD operations. Its current focus is on another technology called plasma display panels.

Kazuharu Miura, analyst with Daiwa Institute of Research, said the decision reflects Toshiba's strategy to partner with Sharp to ensure a steady supply of panels for Toshiba brand TVs while not producing the panels on its own.

"Many TV makers don't make the panels. The important issue for them is making sure there's a reliable panel-maker for purchasing the panels," he said.

The selection as Toshiba's supplier is a victory for Sharp, Miura said.

Toshiba had earlier been a member of the Matsushita-Hitachi LCD partnership. The Nikkei, Japan's top business daily, reported earlier this week that Japanese camera-maker Canon will join the Matsushita-Hitachi LCD partnership.

The report said they will also work together in another panel technology OLED, a new light-emitting display based on electroluminescent organic materials to deliver clear image quality.

The technology is generally still considered too expensive for a commercial product, and opinion is divided in the industry on what panel technology, if any, will become the standard for thin TVs. Sony is the only electronics maker that has a small TV with an OLED screen.

Like Samsung, Sharp is among the world's biggest manufacturers of LCD panels, including large-size panels measuring 60 inches for TVs.

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