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Three big Japanese electronics makers in LCD panels talks

Hitachi Ltd, Matsushita Electric Industrial Co and Toshiba Corp., three of Japan's biggest electronics makers, are in talks to jointly produce liquid crystal displays (LCDs) used in television sets, the companies said.

"It is true we're in talks with Hitachi and Matsushita on LCD production," said Yasuo Mori-moto, a senior Toshiba executive vice president.

Hitachi's Yasuo Hirano, deputy director of corporate communication, said the company doesn't plan "to invest alone in LCD production for large television sets" and it "won't deny we're in talks on production with someone else."

Hitachi and Matsushita said they had reached a basic accord on an alliance aimed at challenging a joint venture between another major Japanese consumer electronics maker, Sony, and rival Samsung Electronics Co of South Korea, the Nihon Keizai Shimbun said yesterday..

Hitachi, Japan's largest electronics maker, and Matsushita, Japan's largest consumer electronics maker, together will invest ?100 billion (US$895 million) in an LCD factory to be built in Chiba, near Tokyo, in 2006, the Nihon Keizai reported.

That compares with the 2.1 trillion won (US$1.8 billion) that Samsung and Japan's Sony Corp said they will spend building a seventh-generation (7G) plant.

Hitachi, Matsushita and Toshiba need to work together to compete with larger rivals, as the LCD market is expected to expand about 73 percent this year.

Samsung Electronics and LG Philips LCD Co, the world's two biggest makers of LCDs geared for TVs and computer monitors, each has about triple the market share that the three Japanese companies have combined. Both are building new display factories.

"With Samsung coming out with seventh-generation plants, the Japanese LCD makers just don't have the costs to compete and have no choice but to work together," said Naoki Sato, an analyst at Morgan Stanley Japan.

Sato currently rates Hitachi as "underweight" and Toshiba "overweight."

A 7G plant can cut up eight 40-inch screens at a time, or double the number of a sixth-generation line.

Sato says "it's still not too late for the Japanese companies to make a presence in the market," as demand for large LCDs will continue to grow even after the Athens Olympics ends, because people are shifting away from cathode-ray tube televisions.
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