The three firms will combine forces to create a new company called Japan Display that will manufacture small to medium-sized LCD screens for increasingly common consumer products, such as smartphones and tablet PCs.
All three have already signed a memorandum of understanding, which is not currently binding. However, they expect to sign a full legally binding contract later this year.
The news comes just days after Samsung announced it is to cut 10 per cent of the executives in its struggling liquid crystal display division, in a drastic bid to cut losses. At the time, a Samsung spokesperson said: “[the sackings] this is to strengthen competitiveness of the LCD business and stabilise the organisation amid the industry’s increasing uncertainties.”
Although the companies already control 21.5% of the LCD market between them, experts believe full integration of their businesses might be difficult as they all use different technology in their displays. Nonetheless, the trio expect their LCD display businesses to be fully integrated by early 2012.
It is understood the venture will be receiving financial backing from the Japanese government and will be operated by a firm called Innovation Network Corporation of Japan (INCJ). INCJ are 90% government owned, and subsequently the venture will be 70% government owned, with Toshiba, Hitachi and Sony receiving the remaining 30% of shares between them.
Questions have already been raised about the exact financial goals of this project, especially when it is accepting vital government funding. Shigeo Sugawara from Sompo Japan Nippon Koa Asset Management, said: "It's not a business that will likely provide stable profits in the mid to long term."
It is thought that INCJ will eventually sink up to ¥200 billion (roughly £1.6 billion) into the venture, which could see it overtake Sharp and Samsung to become the biggest producer of LCD screens in the world.