Japanese electronics makers Sharp Corp and Toshiba Corp said yesterday they will join forces in flat-panel televisions, stepping up efforts to fend off increasingly fierce global competition.
The two companies have agreed to collaborate closely to meld Sharp's technologies in liquid-crystal displays (LCDs) with Toshiba's expertise in image-processing chips, which are becoming ever more vital for advanced TVs.
Manufacturers are waging a "heated battle" in the global flat TV market, making it harder for one company to cope on its own, Toshiba president Atsutoshi Nishida told a press conference.
Under the alliance, which is due to begin in the fiscal year from next April, Toshiba will buy large quantities of LCD panels from Sharp for use in its Regza-brand televisions with screen sizes of more than 32 inches.
For its part, Sharp will buy semiconductors from Toshiba to use in its Aquos-brand LCD TVs.
The announcement came just a day after Sharp said it had become the top shareholder in troubled rival Pioneer Corp.
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"Given the recent deal with Pioneer Corp and the arrangement with Toshiba, Sharp will be the biggest beneficiary, as it can secure a stable buyer for its LCD panels," Mizuho Investors Securities analyst Mitsuhiro Osawa said.
"It seems that Toshiba is losing its strong interest in the flat TV business," Osawa added.
By the year to March 2011, Toshiba plans to source 40 percent of its LCD modules from Sharp.
Toshiba currently buys LCD panels from IPS Alpha Technology Ltd, which it jointly owns with Matsushita Electric Industrial Co and Hitachi Ltd, as well as from South Korea's LG Electronics Inc.
Sharp is a pioneer of LCD screens, having launched one of the world's first LCD pocket calculators in 1973.
The firm has seen four straight years of record profits as consumers dump their bulky traditional-style TVs for sleek flat panel ones.
It is now building a new LCD panel and TV plant in Sakai city, Osaka prefecture, western Japan, at a cost of ¥380 billion (US$3.4 billion).
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Toshiba meanwhile is focusing increasingly on computer chips.
In October the group said it had reached a basic deal to buy Sony Corp's advanced semiconductor business. Toshiba has also expanded in the energy industry, buying US nuclear plant maker Westinghouse Electric last year.
Japan's electronics industry is undergoing a major realignment as companies restructure in response to growing competition both domestically and from rival firms in countries such as South Korea and Taiwan.
Another high-tech giant, Hitachi Ltd, said yesterday that it was considering steps to turn around its struggling hard-disk drive business amid reports of a partial sale to US investment fund Silver Lake.
The Nikkei business daily reported that Hitachi is negotiating with the fund with the aim of striking a deal by next month for Silver Lake to buy 50 percent of the shares in Hitachi's wholly owned hard-drive subsidiary in the US.
Hitachi said in a statement that it was "considering, and has taken, various steps to turn around the business, but no decision has been made on the sale of the business."
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