Consumer electronics giants Hitachi and Matshushita Electric are joining forces to share and develop technology for flat screen televisions.
Flat screen televisions are increasingly popular
The tie-up comes as the world's top producers are having to contend with falling prices and intense competition.
The two Japanese companies will collaborate in research & development, production, marketing and licensing.
They said the agreement would enable the two companies to expand the plasma display TV market globally.
Plasma display panels are used for large, thin TVs which are replacing old-style televisions.
The display market for high-definition televisions is split between models using plasma display panels and others - manufactured by the likes of Sony and Samsung - using liquid-crystal displays (LCDs).
The deal will enable Hitachi and Matsushita, which makes Panasonic brand products, to develop new technology and improve their competitiveness.
Hitachi recently announced a deal to buy plasma display technology from rival Fujitsu in an effort to strengthen its presence in the market.
Separately, Fujitsu announced on Monday that it is quitting the LCD panel market by transferring its operations in the area to Japanese manufacturer Sharp.
Sharp will inherit staff, manufacturing facilities and intellectual property from Fujitsu.
The plasma panel market has seen rapid consolidation in recent months as the price of consumer electronic goods and components has fallen.
Samsung Electronics and Sony are among other companies working together to reduce costs and speed up new product development.