Hitachi, Canon, Panasonic to work together on flat-panel displays

Share the development woes, share the benefits

Hitachi Ltd., Canon Inc. and Matsushita Electric Industrial Co. (Panasonic) have agreed to a wide-ranging collaboration that will see the three companies share the cost, burden and benefits of development and production of flat-panel displays.

The move comes hot on the heels of an agreement announced last week between Toshiba Corp. and Sharp Corp. and continues a major realignment in the fast-moving industry.

Under the terms of the initial agreement, Canon and Panasonic will each buy a 24.9% stake in Hitachi Displays, a wholly owned subsidiary of Hitachi that already makes small and medium-size LCD panels. The transaction, which is subject to regulatory approval, is expected to be completed before March 31, 2008.

Hitachi said it hopes to accelerate the development of cutting-edge LCD technology through this alliance, which was announced on Tuesday. Competition in the flat-panel display industry is fierce, and there is constant pressure on manufacturers to invest in new and efficient production technology to keep prices low and their screens technologically competitive. But a new LCD plant can easily cost $1 billion or more, so companies are increasingly working together to share the expenses.

Meanwhile, Canon said it hopes to shorten development time and gain a stable supply of LCD panels for its range of digital SLR (single-lens reflex) cameras. It also hopes to develop new types of displays that can be used in its information management products.

Panasonic, which has invested heavily in PDP (plasma display panel) technology for large flat-panel TVs and displays, will invest in a new production line at IPS Alpha Technology Ltd. The company is a joint venture in which Canon and Toshiba also hold stakes, although Toshiba is understood to be in talks concerning its exit from the venture. The new production line will help ensure a stable supply of medium-size LCD panels for Panasonic TVs up to about 40 inches in screen size, above which the company uses PDPs.

The agreement announced Tuesday is the first step in a series of planned moves that will eventually have Canon take control of Hitachi Displays and Panasonic take control of IPS Alpha Technology, the three companies said.

In addition to the LCD alliance, Canon and Hitachi plan to work together on development of OLED (organic light-emitting diode) displays. OLED is a fundamentally different technology from LCD and PDP and has been under development by many display makers for several years. It's viewed by some as a potential replacement for LCD technology because it provides a brighter and richer picture, but a lot of work remains before it can be produced in sufficient volume and at a low enough price to compete with LCDs.

The world's first commercial OLED TV recently went on sale in Japan. Sony Electronics Inc.'s XEL-1 has an 11-in. screen and is just 3mm thick -- another advantage of OLED, since a backlight unit isn't required -- but it comes with an equally impressive $1,750 price tag.

Last week, Toshiba and Sharp announced plans to work together in the flat-panel display business. Toshiba will buy screens from Sharp for its 32-inch and larger TV sets, while Sharp will buy the chips used in its TVs from Toshiba. The arrangement will begin in April and will slowly build toward 2010, when two goals are expected to be reached: Sharp will supply Toshiba with 40% of its LCD modules, and Toshiba will sell Sharp 50% of the chips it needs, the companies said.

Sony and Samsung Electronics Co. have been cooperating in LCD panel production for some time and jointly own S-LCD, a manufacturer of cutting-edge LCD panels based in South Korea.

Copyright © 2007 IDG Communications, Inc.

7 inconvenient truths about the hybrid work trend
Shop Tech Products at Amazon