Japanese electronics giant Sony, Toshiba and Hitachi are setting up a joint venture to develop small and medium-sized display panels for tablet and smartphone devices.
The companies are expected to sign the deal later this year and merge their businesses sometime during the first three months of the next year.
The merger of the three businesses will make them the largest maker of small and medium sized LCD screens. The companies, with the help of the Japanese government, will be able to compete with South Korean manufacturers like Samsung Electronics.
According to media reports, the companies were earlier not willing to go into the LCD business as they believed that the prices will soon fall. However, with the rise in sale of tablets and smartphones, the demand for small LCD screens is increasing as well.
The newly formed venture will be managed and operated by the Innovation Network Corporation of Japan, which is backed by the Japanese government. Under the deal, INCJ will hold 70 percent stake in the company while Sony, Toshiba and Hitachi will each get 10 percent.
"By integrating each partner company's wealth of display expertise and know-how, I am confident the new company will become a driving force for technological innovation," said Sony Chairman and Chief Executive Howard Stringer.