Companies tying hands in OLED market

Joint ventures and holding of stakes by one company in the other used to be a problem for the big firms a few years earlier, but now they seem to have accepted this in order to improve their business.

The latest in the series of agreements is a tie-up declared by the three big shots in the Japan’s electronic industry. Matsushita Electric Industrial Co, Hitachi Ltd. and Canon Inc have entered an agreement to help them compete in a better way in the fast growing market of flat panel displays.

The flat screen displays have been in big demand in this festive season with the big players like Sony estimating a 100% increase in the products sold in this segment. Recently, Sony announced that it will stop the manufacturing of Rear Projection TVs and concentrate its resources primarily on flat screen TVs as they are going to be the future of this industry.

Hitachi manufactures small and medium sized LCDs (Liquid Crystal Display) and OLEDs (Organic light-emitting diode). In the agreement, it has been decided that Matsushita and Canon will each buy 24.9% stake in Hitachi leaving its own stake at 50.2%.

Till now, the company was completely owned by the Hitachi group with no other player having any part of its shares.

Matsushita is the world leader in plasma TV manufacturing, but it now seems to have realized that LCDs and OLEDs are the new generation TVs and thus, it is making efforts to grow big in this industry.

Matsushita is considering increasing its offerings in the LCD segment by investing in a factory for eighth-generation glass substrates at IPS. It is also planning to increase its stake in IPS Alpha Technology Ltd., an LCD joint venture between Hitachi, Matsushita and Toshiba Corp to almost 50 percent from a current value of 32 percent. The investment will be somewhere around 3 billion Yen.

Hitachi and Canon also have long term benefits from this agreement with Canon wanting regular supply of small displays like OLEDs for its next generation digital cameras and printers whereas Hitachi is thinking of lowering down the scale at which it produces the LCDs as there is intense competition in this field now and the margins are reducing day by day.

Sony recently started offering an 11-inch OLED TV called the XEL-1 in Japan, and the company demonstrated a 27-inch 1080p resolution prototype at the 2007 Consumer Electronics Show.

Toshiba also plans to cut back investment in panel production, but it will continue making and selling flat-panel TVs