Sony and Sharp have forged an alliance to help them meet the growing demand for liquid crystal display televisions.
Sharp is currently building the world's largest LCD panel factory
Sony is to take a one-third stake in Sharp's $3.5bn (£1.8bn) LCD panel factory, which is due to be completed in March 2010.
Sony does not currently make the LCD panels for its flat-screen televisions, relying instead on a joint venture with South Korea's Samsung.
Sony shares rose more than 1% on the news, while Sharp closed unchanged.
Sony and Samsung branded televisions are competing for the number one spot in LCD sales, with Sharp trailing behind them.
Global sales of LCD televisions are expected to double to 155 million units by 2012, according to the Japan Electronics and Information Technology Association.