Three Japanese technology giants have reached a basic agreement that enables them to share the costs of developing and growing their LCD panel business and technologies…and hopefully share in the rewards of an expanded market. Under the deal, Canon and Matsushita will each buy 24.9 percent of the shares of Hitachi Display Co., Ltd., which is Hitachi’s subsidiary dedicated to developing small- and medium-sized LCD panels. Hitachi’s share of the company will constitute a slim majority ownership (50.2 percent), and the company gets a massive capital infusion to continue development of LCD technologies and manufacturing facilities.
Under the deal, Canon gets access to Hitachi’s small- and medium-sized LCD business, and will also help out with development of OLED display technology. Conversely, Matsushita gets access to HItachi’s In-Plane Switching (IPS) technology (that provides greater color consistency and wider viewing angles for LCD panels) and a significant entry into the LCD business, hedging its previous bets in plasma flat-panel technology. Of course, Matsushita is also interested in Hitachi’s plans for OLED production.
The deal had been rumored for some time, most recently coming to a head in mid-December. The companies have not placed a total value on the arrangement and have left many details to be worked out later; however, industry estimates place the value of the deal in the billions of dollars. Although competition is forcing the street prices of LCD panels down, the startup costs for creating a new LCD manufacturing facility are well over $1 billion, and competitors (like Sharp and Toshiba, and Sony’s long-standing LCD partnership with South Korea’s Samsung have already partnered together to share costs.
