Japanese makers forge US$1 billion LCD alliance

Hitachi, Toshiba and Matsushita will pour US$1 billion into manufacturing large LCDs for flat-screen TVs.

Hitachi, Toshiba and Matsushita Electric have formed a joint venture to manufacture large liquid-crystal displays for flat-screen televisions, escalating competition for a piece of the digital living room.

The three Japanese giants said Tuesday that they will pour US$1 billion into the new company, which has yet to be named. The companies plan to build a manufacturing facility in Mobara, Japan, on a site owned by Hitachi Displays, an LCD unit of Hitachi.

The plant is scheduled to begin operations in 2006, and will churn out 2.5 million 32-inch panels a year in 2008, according to the companies. The factory will cut panels from so-called sixth-generation "motherglass," which will measure at least 59 inches by 70.9 inches.

The companies said they also plan to manufacture an Advanced Super-IPS (In-Plane-Switching) LCD panel, which is believed to produce better image quality.

In a joint statement, the companies said they expect that demand for large flat-panel televisions will keep growing rapidly, from about 3 million units in 2003 to nearly 15 million in 2009.

More and more, consumer electronics companies have been teaming up to invest in manufacturing plants as they seek a steady stream of supply for their TV businesses. The ebb and flow of panel production often leaves companies competing in the open market for screens, which has historically made the industry highly volatile when it comes to price. This often can unpredictably affect revenue for the companies.

Instead of building expensive plants, often costing billions of dollars, companies have been forming joint ventures that spread the cost and risks. So far, it looks like the risk is worth the reward for consumer electronics companies, as the popularity of LCD televisions grows.

Last month, S-LCD--a joint venture formed by Samsung and Sony--announced the completion of an LCD manufacturing facility in South Korea. Mass production of the LCD panels is slated to begin in the first half of next year. The plant is designed to churn out 60,000 panels a month.

Meanwhile, Sharp, the current top seller of LCD televisions in the Japanese market, built its flagship facility in Kameyama in western Japan last year. It has already started shipping products built in that plant.

Matsushita--better known for its Panasonic brand--and Toshiba said in a press conference that they will continue to purchase LCD panels from Sharp, even after the newly formed venture begins production.

On the other end of the large flat-panel TV spectrum, Matsushita earlier this year said it plans to build a plasma display panel (PDP) plant in Amagasaki, Japan, that will produce 4.5 million 42-inch units a year.

The company leads in sales of PDP televisions in Japan, followed by Hitachi, which has a joint venture with Fujitsu for PDP production, and Pioneer.

Kotaro Yamagish of CNET Japan reported from Tokyo. CNET News.com's Richard Shim contributed to this report from San Francisco.

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