Sony and Toshiba are considering merging their small and mid-size LCD manufacturing units, which make displays for smartphones and tablet devices, to form a new joint entity, according to reports.
The rumoured deal could also include selling a stake in the venture to the Japanese government and would catapult the new unit ahead of Sharp as the leading manufacturer of small LCD displays, a Reuters report on Tuesday said.
According to unnamed sources in the report, the government-funded Innovation Network Corporation is in discussions to invest around 100bn Yen (£758m) in the venture.
An increase in demand for smartphone and tablet devices has resulted in a booming market for small and medium size LCD displays.
In December 2010, rumours surfaced suggesting that Apple would be investing $1.2bn in a Toshiba LCD manufacturing facility that would provide screens for future iPhone handsets.