Toshiba Corp will pay ¥5.5 billion (US$46 million) for a nearly 20 percent shareholding in the Polish subsidiary of LG.Philips LCD Co, forging a partnership with a rival to strengthen its European TV business, the Japan-ese maker said yesterday.
Toshiba's announcement follows the establishment last month of Toshiba's liquid-crystal display TV production and sales company in Kobierzyce, near Wroclaw in southwestern Poland, where production is set to start in August next year.
Global demand for LCD TVs is growing rapidly, including in Europe, and competition among manufacturers is intense.
Japanese electronics and entertainment manufacturer Sony Corp makes LCD panels for TVs in a joint venture in South Korea with Samsung Electronics Co.
LG.Philips LCD is a joint venture between LG Electronics, South Korea's largest home appliance manufacturer, and Philips Electronics NV of the Netherlands. LG.Philips LCD, based in Seoul will hold a more than 80 percent stake in the Polish subsidiary, Tokyo-based Toshiba said in a statement.
Toshiba's investment in LG.-Philips LCD Poland will allow it to secure a stable supply of LCD panels efficiently at competitive prices, the statement said.
"We will leverage this relationship to build an advantageous position in Europe and to provide high quality and competitive products," Toshiba corporate senior executive vice president Toshio Yonezawa said.
Toshiba, which also makes laptops and cellphones, has been buying LCD panels for its TVs from outside suppliers, including LG, company spokeswoman Junko Furuta said.
Toshiba is targeting European production of 3 million LCD TVs by the fiscal year ending March 2010, including production at a plant in the UK, according to Toshiba, but the latest decision may push that higher.
Toshiba and LG.Philips LCD will cooperate closely in developing high-end panels, and Toshiba hopes to get a wide range of panels, including large ones of more than 50 inches, Toshiba said.
Last month, Toshiba said it will invest US$51 million in the TV Polish plant.
LG.Philips LCD swung to a loss in the quarter through June as high inventories drove prices sharply lower.
Toshiba posted its first first-quarter profit since it started reporting April-June quarter earnings in 2002, underlying a recovery at the manufacturer on the back of better sales in TVs, flash memory chips, mobile displays and medical equipment.
Toshiba shares gained nearly 2 percent yesterday to close at ¥721 on the Tokyo Stock Exchange.