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Japanese Firms Seek Flat-Panel Alliances

12/21/2007 12:10:00 PM Eastern

Tokyo — Several Japanese electronics manufacturers this week were lining up partnership investments in Japanese-based flat-panel factories as they gear up for growth in the market segment.

On Thursday, Hitachi was in the final stages of negotiations to sell minority stakes in its flat-panel-display unit to Matsushita (Panasonic) and Canon for up to $2.65 billion, according to a report in the Wall Street Journal.

Then on Friday, Toshiba and Sharp announced an expansion of components acquisitions for LCD production.

According to an Associated Press report, Toshiba will expand its purchasing of LCD panels for 32-inch and larger TVs from Sharp while Sharp will increase its purchasing of computer chips for use in LCDs from Toshiba.

Some analysts have speculated the Japanese electronics companies will join forces to compete more effectively with rivals Samsung Electronics of South Korea, and Taiwan LCD makers.

Through the deal, Sharp will buy about 50 percent of its system LSIs for TVs from Toshiba, and Toshiba will buy about 40 percent of its LCD panels from Sharp by 2010. Toshiba expects to triple its $708 million business with Sharp, the companies said.

Toshiba’s president Atsutoshi Nishida also reportedly said Toshiba will abandon plans to make OLED TVs and will rely instead on Sharp's LCD technology for next-generation displays.

Meanwhile, Matsushita and Canon reportedly approached Hitachi about taking minority stakes in its Hitachi Displays unit.

The deal would help all of the companies increase their participation in the LCD sector, and help Canon in developing next-generation screen technology for its cameras and camcorders.

As this was posted, Matsushita and Canon issued statements saying nothing has been decided, while Hitachi described the story as “speculation,” according to the report.

The deal would not be unprecedented, however. In 2004, Hitachi, Toshiba and Matsushita Electric formed a joint venture called IPS Alpha Technology to manufacture large LCD panels for television displays at a facility in Mobara, Japan, owned by Hitachi Displays.

In addition, Hitachi and Matsushita have an agreement to supply each other with various plasma display panel screen sizes from their various factories.

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