Canon, Hitachi and Matsushita Electric Industrial (the company primarily known for its Panasonic-branded devices) agreed to form the alliance that will heavily invest into development of advanced in-plane switching (IPS) panels for liquid crystal displays (LCDs). The decision underlines importance of LCDs and LCD technology development.

LCD panels are finding growing applications in a diverse array of fields, from mobile phones, flat-panel TVs and PCs to digital still cameras, portable game consoles, printers, automotive electronics and more. While completing technologies – plasma and organic light-emitting diode – may sometimes offer superior specifications compared to LCD, the latter proved to be the optimal choice for a wide variety of applications. Global demand for LCD panels is therefore rising. However, intensifying competition has made it imperative for LCD panel manufacturers to ensure a stable supply of high-quality LCD panels at low prices. This will require ongoing upfront investment and development of cutting-edge technologies. Hitachi has thus decided to expand its business alliances with Canon and Matsushita in order to advance the development of cutting-edge LCD panel technologies through collaborative creation with the respective companies.

Under this alliance, the three companies will merge their strengths to accelerate the development of display technologies and expand their scope of application. Hitachi possesses sophisticated liquid crystal-related technologies, including the in-plane switching (IPS) technology that enables quality color reproducibility, wide viewing angles and other superior features. Canon is involved into the camera, printer and medical equipment fields while Matsushita is the world’s largest maker of plasma panel display (PDP) TVs and currently does not have a broad lineup of LCD-based TVs.

It has been basically agreed by the three companies that Canon and Matsushita will, by transfer of shares from Hitachi, each acquire 24.9% of the shares of Hitachi Displays, a wholly owned subsidiary of Hitachi engaged in small- and medium-sized LCD panel-related businesses, by March 31, 2008, subject to approvals by regulatory authorities. As a result, Hitachi's stake in Hitachi Displays is to become 50.2%. The three companies will further discuss the details of the agreement.

By joining forces with Canon and Matsushita, Hitachi seeks to accelerate the development of cutting-edge technologies. Furthermore, as an end-product manufacturer, Hitachi will strengthen its competitiveness in the flat-panel LCD TV sector by using state-of-the-art LCD panels to develop the world's thinnest flat-panel LCD TV and its ultra-thin flat-panel LCD TVs “Wooo UT series”. In addition, by working to optimally allocate business resources in order to establish a stable, high profit structure as a group, Hitachi will work to advance its basic management policy of “Collaborative Creation and Profits”.

By joining the alliance, Canon seeks to sharpen its product development capabilities by shortening development times and enhancing product features. It also aims to reinforce its digital single-lens reflex camera and various other product businesses employing high-quality, small- to medium-sized LCD panels in the consumer electronics, office equipment, medical and other fields. Furthermore, Canon aims to accelerate ongoing development of organic light-emitting diode (OLED) displays by teaming up with Hitachi, which also boasts advanced display technologies.

Matsushita is expanding and strengthening its mainline PDP operations. It is also deepening its involvement in the businesses of Hitachi Displays, a designer, manufacturer and marketer of IPS liquid crystal panels for large TVs, and of IPS Alpha Technology (IPS Alpha), a joint venture held by companies including Matsushita and Canon. These moves are part of a Matsushita-orchestrated initiative in collaboration with the Hitachi Group to ensure a stable supply of liquid crystal displays by pushing ahead with construction of a next-generation plant at IPS Alpha. The aim is to exploit the performance and cost advantage of the IPS Alpha Panel toward increasing the competitive edge of the Viera series of flat-panel TVs in step with PDP models. Matsushita is moving ahead with the enhancement of a vertically integrated business in the flat-panel TV sector, and sees the new IPS Alpha plant as a possible future base for production of OLED displays. The company intends to continue increasing development and production capability in the flat-panel TV business. It believes that by meticulously responding to diversifying customer wants and needs, it can be the primary force driving the flat-panel TV market worldwide.

As the second stage, the three companies are planning ownership changes that would have Canon, a company with extensive know-how in small- and medium-sized displays from the user side, take a majority holding in Hitachi Displays, and Matsushita, a universally acknowledged leader in the TV sector, take a majority holding in IPS Alpha.