Toshiba, Hitachi and Sony will form LCD display company

Investment of up to £1.6 billion planned

Toshiba, Hitachi and Sony are planning the joint creation of a new company called Japan Display that will manufacture LCD screens for numerous electronic devices

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 notcurrently binding. However, they expect to sign a full legally bindingcontract later this year.

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The news comes just days after Samsung announced it is to cut 10 per centof the executives in its struggling liquid crystal display division, in adrastic bid to cut losses. At the time, a Samsung spokesperson said: “[thesackings] this is to strengthen competitiveness of the LCD business andstabilise 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 asthey all use different technology in their displays. Nonetheless, the trioexpect their LCD display businesses to be fully integrated by early 2012.

It is understood the venture will be receiving financial backing from theJapanese government and will be operated by a firm called InnovationNetwork Corporation of Japan (INCJ). INCJ are 90% government owned, andsubsequently 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 thisproject, especially when it is accepting vital government funding. ShigeoSugawara from Sompo Japan Nippon Koa Asset Management, said: "It's not abusiness 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 andSamsung to become the biggest producer of LCD screens in the world.

Do you think this could result in better screens in phones and tablets, or is this move going to over-saturate the market? Let us know all your thoughts on the T3 Facebook and Twitter pages.