Japanese LCD Makers Consider Teaming Up to Survive

The trio, which would become the largest manufacturer with 20 percent of the LCD market, is aiming to sign an agreement by mid-July and launch new products later this year.

The consolidation would strengthen the Japanese LCD industry as it comes up against vigorous competition from South Korean rivals like Samsung, as well as China's LCD production, which is expected to see sales increase by 20 percent this year.

While Hitachi, Sony and Toshiba have commandeered the LCD market for TVs and other large displays, they are banking on smaller LCD screens for tablets and smartphones to bring them much-needed cash.

Sharp, the world's largest small-scale LCD maker, switched production to small displays at one of its large-screen TV plants.

The Japanese trio may yet succeed in this venture too, as large LCDs for TVs continue to sharply drop. LG lost $229 million in the first quarter, partly owing to dismal flat-screen TV sales as people turn to laptops and tablets for entertainment.

But Sony, Hitachi and Toshiba will have to work hard before they are able to churn a decent profit from their joint venture. Sony especially has been languishing ever since its PlayStation network was hacked to pieces beginning with an initial major data breach in April.

The Tokyo-based manufacturer is facing a $174 million clean-up bill, not to mention legal fees and other expenses.

All three companies are also still reckoning with the aftereffects from Japan's March earthquake and tsunami, which destroyed several LCD plants. Sony lost eight factories and Hitachi one, while fellow LCD maker Panasonic also suffered damages.

Although for the most part plants are back up and running, the losses incurred this spring continue to haunt Japan's tech companies.

If they can successfully come together, Sony, Hitachi and Toshiba might be able to reverse their poor fortunes and compete effectively against rival LCD makers. However, given the deep hole all three are still mired in, it won't be easy.