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3 Firms Reach Flat-Panel Alliance

Tokyo –– Hitachi, Canon and Matsushita reached a basic agreement on an alliance that will see the three companies merging their strengths in flat-panel technology development and production.

Through the alliance, Canon and Matsushita will, by transfer of shares from Hitachi, each acquire 24.9 percent of Hitachi Displays, which is a wholly owned subsidiary of Hitachi that produces small- and medium-sized LCD panels, by March 31, 2008. The deal is subject to approvals by regulatory authorities.

Hitachi’s stake in Hitachi Displays will become 50.2 percent.

Hitachi said it entered the agreements due to growing demand for LCD panels for a wide range of electronics products, including TVs, and cellphones, which will require ongoing upfront investment and development. The company said it decided to “expand its business alliances with Canon and Matsushita in order to advance the development of cutting-edge LCD panel technologies.”

Hitachi expects to “strengthen its competitiveness in the flat-panel LCD TV sector by using state-of-the-art LCD panels to develop the world’s thinnest flat-panel LCD TV and its ultra-thin flat-panel LCD TVs “Wooo UT series,” the company said. “In addition, by working to optimally allocate business resources in order to establish a stable, high profit structure as a group, Hitachi will work to advance its basic management policy of ‘collaborative creation and profits.’ ”

Canon is using the deal to assure stable procurement of LCD panels, while sharpening “its product development capabilities by shortening development times and enhancing product features. It also aims to reinforce its digital single-lens reflex camera and various other product businesses employing high-quality, small- to medium-sized LCD panels in the consumer electronics, office equipment, medical and other fields.”

The company also aims to accelerate ongoing development of OLED displays by teaming up with Hitachi, which also boasts advanced display technologies.

As it strengthens its own mainline plasma display panel operations, Matsushita is using the Hitachi investment to also secure a stable supply of LCDs by “deepening its involvement in the businesses of Hitachi Displays” by pushing ahead with construction of a next-generation plant at IPS Alpha, a joint venture between Hitachi Displays, Toshiba and Matsushita.

Matsushita said it sees the new IPS Alpha plant as a possible future base for production of OLED displays. The company intends to continue increasing development and production capability in the flat-panel TV business.

According to a joint statement, a second stage of the agreement will see the three companies changing the ownership structure giving “Canon, a company with extensive know-how in small- and medium-sized displays from the user side, a majority holding in Hitachi Displays, and Matsushita, a universally acknowledged leader in the TV sector, a majority holding in IPS Alpha.”