Report: Sharp, Toshiba discussing LCD alliance

Sharp and Toshiba are discussing a flat-panel display alliance that could lead to a big shake-up in the industry, a Japanese newspaper reported Friday.

As part of the deal, Sharp will begin supplying Toshiba with LCD (liquid crystal display) panels from a new plant the company is building in Osaka, Japan, according to The Nikkei newspaper.

The ´380 billion (US$3.4 billion) plant is currently under construction in Osaka's Sakai City, with production scheduled to begin in 2009. The plant will be able to 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-size glass also brings 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 obtains panels for its large-screen TVs from IPS Alpha Technology Ltd., a company that it jointly owns with Panasonic and Hitachi, and from South Korea's Samsung. By aligning with Sharp for large-screen panels, Toshiba will pull out of IPS, The Nikkei said. IPS currently operates a 6th-generation LCD manufacturing line, and the company will need substantial investment to upgrade or replace this if it is to remain in the market.

Sharp and Toshiba wouldn't immediately comment on the newspaper report; however, Sharp hinted that an announcement could come later Friday.

SMS: Sharp and Toshiba are discussing a flat-panel display alliance that could lead to a big shake-up in the industry, a Japanese newspaper report said on Friday.

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