Sharp Corp. and Sony Corp. on Thursday finally entered into an agreement to establish a joint venture company to produce and sell large-sized LCD panels and modules. Early this year Sony and Sharp postponed the creation of the LCD joint-venture due to the global economic recession. However, the two companies are now ready to jointly operate the 10^th generation LCD fab.

The jointly operated world’s most advanced LCD plant to date will allow Sony to secure LCD panel supply for its high-end TV-sets, whereas Sharp will be able to invest only 66% of the factory’s cost. In addition, since the new fab processes larger substrates, Sharp and Sony will be more competitive on the market of very large TV-sets.

On July 1, 2009, Sharp split out its new LCD panel plant located in Sakai City, which is under construction, and transferred it to Sharp Display Products Corporation (SDP), its wholly-owned subsidiary. SDP is scheduled to commence operations in October 2009. On December 29, 2009, as the first step toward the final investment ratio (66% by Sharp and 34% by Sony), Sony will invest ¥10 billion ($104.498 million) into SDP in exchange for new shares to be issued by SDP to Sony as third-party allocation. As a result of this transaction, SDP will become a joint venture company of Sharp and Sony on the same day.

The joint-venture agreement between the two companies further provides that Sony will make a number of additional capital injections to SDP subject to conditions set forth in the joint-venture agreement.

SDP will seek to maximize the advantages gained from using the world's first 10^th generation glass substrates to produce large-sized LCD panels and modules that deliver the industry's highest levels of quality, cost and performance.

10^th generation LCD factories will process substrates that have sides of 3 meters or longer, whereas currently utilized 8^th generation factories process LCD substrates that have sides of 2.2 – 2.5 meters. Initially the jointly operate fab will be able to process about 36 thousand substrates a month, but eventually the factory will be expanded to reach processing performance of72 thousand substrates per month.

Sharp and Sony will further discuss joint development of components for LCD modules to strengthen their mutual collaborative relationship.

Tags: Sharp, Sony, LCD, HDTV