Toshiba and Sharp Pair to Defend their Business

The two all-times Japanese rivals Toshiba and Sharp have reached an agreement upon enlarging their liquid crystal displays businesses, in order to fight the increasing competition in the flat-panel TV sector. According to both companies' presidents, Toshiba will purchase LCD panels from Sharp for TVs of 32 inches or larger, while Sharp will increase the computer chips orders sent to Toshiba for use in Sharp's LCDs.

The new partnership is meant to protect the two company from aggressive rivals such as South Korea Samsung Electronics manufacturer or the Taiwanese LCD panel makers. The agreement will also preserve Sharp's dominant position on the LCD panel market.

According to Toshiba's president, Atsutoshi Nishida, the partnership will create a "win-win relationship" to combine the high-quality LCDs produced by Sharp with Toshiba's finest semiconductors. "To survive the tough competition, we need to be strong in both the key device of panels and the technology of system LSIs," he said. "It is difficult for one company to handle both."

Some details of the partnership must be ratified first, but it's for sure that the two companies will collaborate in developing TV technology and products. Both officials refused to disclose how close the two companies have been working out until now, but Toshiba's business with Sharp is currently estimated at $708 million, and is likely to triple with the advent of the new partnership.

Sharp will buy about 50 percent of its system LSI for TVs from Toshiba, while the latter will take about 40 percent of its LCD panels from Sharp. The partnership is supposed to last until 2010, but as the companies' businesses evolve, the figures may grow larger.

"Many TV makers don't make the panels. The important issue for them is making sure there's a reliable panel-maker for purchasing the panels," said Kazuharu Miura, analyst with Daiwa Institute of Research.