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Hitachi shares up 3.85% on LCD tie-up

Matsushita, Hitachi and Canon announced yesterday a tie-up in their liquid-crystal-display (LCD) businesses, the latest collaboration in the increasingly competitive flat-panel industry.

The three companies announced the plan in a joint statement. Officials said a press conference would be held later in the day.

Their collaboration creates a third major force in the flat-panel industry in Japan along with the Sony's alliance with South Korea's Samsung Electronics and the Sharp and Toshiba team, which was announced last week.

"Under this alliance, the companies will merge their strengths to accelerate the development of cutting-edge display technologies and expand their scope of application," the statement said.

The alliance is expected to help Hitachi restructure its sprawling portfolio of subsidiary companies and enable Matsushita and Canon to raise their profile in the LCD sector.

Hitachi Ltd will reduce its interest in wholly owned subsidiary Hitachi Displays Ltd to slightly more than 50 percent. The unit has been posting losses.

The remaining shares will be divided equally between Matsushita and Canon by March 31 next year according to the statement.

Canon may eventually take over a majority stake in Hitachi Displays, it said.

Hitachi Displays makes small and mid-sized LCD panels and the tie-up will allow Canon to procure a steady supply of monitors for digital cameras.

Canon Inc also plans to further promote development of organic light-emitting diode panels, or OLEDs, with Hitachi, the statement said.

Matsushita said it will increase its involvement in IPS Alpha Technology, a joint venture between the three companies and Toshiba.

Press reports said Toshiba, which on Friday signed an agreement to buy large quantities of LCD panels from Sharp, is expected to sell its stake to Matsushita Electric Industrial Co.

Matsushita is looking at plans for a next-generation plant at IPS Alpha to ensure a stable supply of LCDs and may use the new plant as a possible future base for production of OLED displays, according to the statement.

"I think the three companies have considerable potential in the OLED business," said Hideki Watanabe, an analyst with Shiko Securities. "They have the basic technology."

However, he questioned Matsushita's plan to get involved in large-size displays, saying the company is behind competitors such as Sharp.

Matsushita also said it will expand and strengthen its mainline plasma display panels operations.

Next-generation technologies like OLED panels, which use light-emitting diodes based on electroluminescent organic materials, could help manufacturers boost both prices and sales, analysts said.

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

Hitachi shares increased 3.85 percent to ¥836 (US$7.33) after the announcement, while Matsushita stock rose 1.08 percent to ¥2,325. Canon finished unchanged at ¥5,240.
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