TOKYO - Japanese electronics rivals Toshiba and Sharp expanded ties in making liquid crystal displays Friday, with competition growing increasingly intense among flat-panel TV producers.
Toshiba Corp. will purchase LCD panels from Sharp for TVs of 32 inches or larger, the presidents of both companies said at a news conference at a Tokyo hotel. In turn, Sharp will buy more computer chips for use in LCDs from Toshiba.
Speculation has been growing that Japanese electronics makers will join forces to be more competitive, particularly against rivals such as Samsung Electronics Co. of South Korea, Taiwan makers and others.
The biggest players now in LCDs include Sharp Corp., Samsung, which has a joint venture with Sony Corp., and Hitachi Ltd.
Toshiba President Atsutoshi Nishida said the partnership will create a "win-win relationship," combining the strong LCDs of Sharp with the strong semiconductors of Toshiba.
"To survive the tough competition, we need to be strong in both the key device of panels and the technology of system LSIs," he told reporters, referring to the sophisticated chips increasingly used in digital consumer goods that are Toshiba's forte. "It is difficult for one company to handle both."
Toshiba and Sharp will cooperate on developing TV technology and products, although the details must still be ironed out, said Nishida and Sharp President Mikio Katayama.
Sharp, as a result of the collaboration, will buy about 50 percent of its system LSI for TVs from Toshiba, and Toshiba will buy about 40 percent of its LCD panels from Sharp by 2010. Those numbers may grow, they said.
The companies did not reveal how much cooperation currently exists, or identify other companies with which they do business.
But Nishida said Toshiba's business with Sharp, now estimated at about 80 billion yen ($708 million), will triple.
Kazuharu Miura, analyst with Daiwa Institute of Research, said the decision reflects Toshiba's desire for a steady supply of panels.
"Many TV makers don't make the panels. The important issue for them is making sure there's a reliable panel-maker for purchasing the panels," he said.
On Friday, Nishida said Toshiba will abandon plans to make OLED TVs, a new light-emitting display based on electroluminescent organic materials, and will rely on Sharp's LCD technology for next-generation TVs.
Sharp is among the world's biggest manufacturers of LCD panels, including large-size panels measuring 60 inches for TVs.
Shoji Tobisawa, an analyst with IDC in Japan, said Sharp and Toshiba need to work together to reduce costs, with prices for flat-panel televisions dropping faster than analysts had expected.
"Market growth is slowing," he told Dow Jones Newswires.
Sharp shares rose 2.9 percent to 1,956 yen ($17.30) in Tokyo, while Toshiba shares gained 2.5 percent to 837 yen ($7.40).
