Sony, Hitachi and Toshiba team up with goverment cash

Sony, Hitachi and Toshiba have agreed to team up to pit their combined might against Samsung in the LCD panel market.

Backed by a Japanese government fund the three amigos will attempt to fight back against competition from Korea and Taiwan in the panel business.

All three firms have been languishing in a panel market where they are unable to scrape a profit as both the TV and PC monitor markets hit the rocks.  In fact it has been rumoured for a while now that some drastic action would be taken in order to mount a challenge in the panel industry.

Now the companies will spin off their panel businesses to create Japan Display K.K. by early next year according to Bloomberg.

Innovation Network Corp of Japan, an organisation backed by the government, will account for 70 percent of the new venture having thrown $2.6 billion into the kitty.  Sony, Toshiba and Hitachi will share the remaining 30 percent.

It is expected that the venture will create the largest manufacturer of small scale such as that for smarthphones or and tablets.

And with the LCD TV market in a replacement cyclei in developed nations, and PC sales floundering, it seems that the small screen market is a safer bet for the largely public owned company.

New production lines will now come on line using INCJ cash, with external managers expected to arrive.  The three firms will also appoint directors to the board.

Meanwhile another Japanese firm in the panel business, Sharp, which is to see investment from Apple, is expecting to see its own profits shoot up as it capitalises on the boom in smaller screens.

Sony is expected to focus more on its sensor business for digital cameras and smartphones after spinning off its small panel business. This will involve double its spending on capacity.

The panel business has been seeing much upheaval recently, with LG Display among those thought to be cutting spending on panel capacity. Samsung itself denied that such a move would be occurring however.

Samsung is also looking away from LCD and towards AMOLED technology in a bid to stay ahead of its competitors in the panel market.