Sharp and Toshiba plan to closely cooperate in the flat-panel TV business, buying screens and semiconductor chips from each other.
Toshiba will turn to Sharp for the 32-inch and larger flat-panel displays used in its LCD (liquid crystal display) televisions while Sharp will procure from Toshiba the chips used in its TVs. The cooperation will begin during the year from April and will slowly build towards 2010 when two goals are expected to be reached: Sharp will supply Toshiba with 40 percent of its LCD modules and Toshiba will sell to Sharp 50 percent of the chips it needs.
The deal provides both companies with a steadier supply of vital components for LCD TVs. The market for such televisions has grown from 161 million units in 2003 to an estimated 192 million this year and is expected to keep on rising on the back of strong demand and competition.
Some of the display panels headed for Toshiba will come from a state-of-the-art ¥380 billion (US$3.36 billion) LCD manufacturing plant Sharp is building in Osaka's Sakai City. Production is scheduled to begin in 2009. The plant will handle mother glass -- the large sheets on which several display panels are made -- of 2.85 meters by 3.05 meters. This size, dubbed 10th generation, is larger than that used by any other display manufacturer and will make the Sakai plant the world's most advanced LCD production center.
The large glass sheets also bring a cost advantage for Sharp. The per-inch price of LCD panels drops with increases in the size of mother glass, so the panels are likely to be more competitive than those from rivals. That's especially important in the TV market, where strong competition has made price a key to success.
Toshiba currently holds a stake in IPS Alpha Technology, an LCD manufacturing joint venture created with Panasonic and Hitachi. The IPS line uses an older 6th-generation technology and will need substantial investment if it is to remain competitive in the market.