Japanese LCD Makers Team Up to Challenge Koreans

The Japanese-backed joint venture, Japan Display, working in conjunction with government-funded firm Innovation Network Corporation of Japan, or INCJ, is slated to launch this coming spring. Once the merger passes international and national scrutiny, Japan Display will become the world's largest LCD producer.

INCJ, which gets much of its funding from the Japanese government, is paying for most of the joint venture. The firm's $2.6 billion investment will give it a 70 percent stake in the venture. Sony, Toshiba and Hitachi will each have 10 percent shares, and Japan Display will encompass their small display subsidiaries.

Japan Display will have some extra help from Panasonic, which is selling one of its largest domestic factories to the new venture for an undisclosed amount.

The consolidation, which has been under discussion for several months, could strengthen the Japanese LCD industry, which is facing competition from South Korean rival Samsung, as well as LCD production from China. Hitachi, Sony and Toshiba are all successful in large LCDS for televisions, but they lag behind the competition where small screens for tablets and smartphones are concerned.

In addition, the three companies faced losses in the LCD market as well, with flat-screen TV sales dropping as more people use their laptops and tablets for entertainment.

All three companies are also still struggling with the after effects 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.

The sheer scale of Japan Display's combined capabilities, patent portfolios and the research and development departments of the three still-strong Japanese companies should still help them combine to form a powerful corporation to compete more effectively than the three could individually.