Intense price competition in the LCD market has hurt earnings at the venture. The parent firms will divide up operations, taking over different areas in an effort to restore profitability.
Display Technologies Inc (DTI) will become a wholly owned subsidiary of IBM. The new unit will take over output of large LCDs for personal computers, medical equipment and production machinery at DTI's existing Shiga Prefecture factory.
Toshiba will create a new venture of its own, capitalized at 5 billion yen (US$40.1 million), to assume production of smaller LCDs for devices such as cellular phones and personal digital assistants at DTI's Himeji plant in Hyogo Prefecture.
About half of DTI's 1,200 workers will be transferred to the Toshiba venture.