Japanese giants team up on LCDs

Falling consumer demand added to the growing losses

Toshiba and Matsushita Electric Industrial are planning to pool their LCD flat screen resources, in a bid to ride out the depression hitting the electronics market.

The two companies are struggling with the rest of the Asian electronics industry to deal with the downturn, whose effects are especially severe in the chip and screen markets.

Toshiba, Japan's number one chipmaker, said in August that it expects to lose 115bn yen ($950m; £650m) this year, with its LCD business making a 15bn yen loss on sales of about 170bn yen.

Matsushita has said second half losses will be 50% worse than expected at 68bn yen.

The two also have to face aggressive sales tactics from Korean and Chinese manufacturers - a factor that has led domestic competitor NEC to outsource some of its LCD business to Taiwan's Chi Mei Optoelectronics.

New number two?

While neither Toshiba nor Matsushita detailed what their alliance will mean in practice, Japanese press reports suggest they will form a new company to take over LCD design and production.

Such a company, in which Toshiba would be the senior partner, would take the number two spot in Japan behind Sharp.

The alliance will build on a pre-existing joint venture, a planned $1bn LCD plant in Singapore.