Matsushita, Hitachi, Canon Forge Flat-Panel Alliance

Matsushita Electric (MC), Hitachi (HIT) and Canon (CAJ) announced Tuesday that they will combine their liquid crystal display businesses, the next in a series of collaborations in the flat-panel industry. Matsushita, which manufactures Panasonic-brand electronics, is the world's leading producer of plasma TVs. "Under this alliance, the three companies will merge their strengths to accelerate the development of cutting-edge display technologies and expand their scope of application," they said in a statement. The WSJ notes that the link-up will create a "third major force in the flat-panel industry" following the Sony (SNE)-Samsung combination and the Sharp (SHCAY.PK)-Toshiba (TOSBF.PK) alliance announced a week ago. Hitachi will cut its position in loss-making subsidiary Hitachi Displays to just over 50%, with the remaining shares to be split equally between Matsushita and Canon. Canon said it might ultimately take a majority stake in the unit. Hitachi Displays produces small and mid-sized LCD panels that Canon will use for digital camera monitors. Matsushita will nearly double its stake in LCD manufacturer IPS Alpha Technology, a JV between the three companies and Toshiba, to over 50%. "Th[is] move will give Matsushita a foothold to expand in LCDs," said SBI E*Trade Securities analyst Hideyuki Suzuki. "There's been a concern with Matsushita because it's focusing on plasma screens at a time when LCD screens are overwhelmingly better." JPMorgan Chase estimates that global shipments of LCD TVs -- which are brighter and thinner than plasma TVs -- will rise 33% to 94.7 million units in 2008 while plasma set sales should rise 26% to 13.1 million units.

Sources: Bloomberg, Wall Street Journal

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