Sanyo, the struggling Japanese electronics firm, has announced a tie-up with Taiwan's Quanta Computer to make flat-screen TVs.
Sanyo share of the flat-screen market is less than 2%
Sanyo hopes the agreement will boost its currently small share of the fast-growing market.
Details of the deal have yet to be finalised, but Quanta is expected to take over Sanyo's TV production arm.
Sanyo lags well behind Sony and Philips with a 1.5% share of the global liquid crystal display (LCD) TV market.
Sanyo shares rose sharply in anticipation of Friday's announcement.
The Japanese firm has been restructuring its business and exiting unprofitable markets in an effort to reduce losses.
Earlier this year, it sealed a joint venture with Nokia to manufacture mobile phones handsets.
Sanyo makes more than six million TV sets a year but the majority are traditional cathode ray tube models, sales of which are falling.
The huge investment required in manufacturing flat-screen TVs has hindered Sanyo's efforts to get a foothold in the market.
Quanta is the world's largest contract manufacturer of laptops, but also has a division manufacturing LCD panels for flat-screen TVs.
Analysts reacted positively to the proposed tie-up.
"Sanyo can strengthen its brand competitiveness by securing panels from Quanta Display to reduce costs, " said Credit Suisse First Boston analyst Wanli Wang.
"For Quanta Computer, it might win orders from Sanyo."