Sharp and Sony have agreed to form a joint venture to operate a new LCD plant in Japan, completing a plan that was earlier postponed because of the global economic downturn.
The deal secures Sony a stable supply of LCD panels for its Bravia LCD televisions while also relieving Sharp of some of the investment and operation costs of the ¥430 billion (US$4.5 billion) factory. Sony will take a 34 percent stake in the plant thus funding 34 percent of the cost of the factory and giving it rights to 34 percent of the output.
The factory is already under construction and is due to open in March next year at which time it is expected to be the most advanced LCD factory in the world.
The level of technology at an LCD factory is measured by the size of mother glass sheets, which are the large glass sheets on which several panels can be made. Size is important because larger sheets mean greater efficiency and lower costs. And in the cut-throat flat-panel TV business cost is one of the most important factors to success.
The new factory is a so-called 10th generation LCD plant, which means it can handle mother glass measuring 285 centimeters by 305 centimeters. On such a sheet it is possible to make six LCD panels in the 60-inch class, eight panels in the 50-inch class or 15 panels in the 40-inch class.
When it begins production the factory will be able to handle 36,000 such sheets of mother glass per month but will be expanded to eventually reach 72,000 sheets per month.
Sony and Sharp have been negotiating the joint venture since February 2008, when they originally set September as a deadline for an agreement. However the poor economic conditions that prevailed from late last year led the two companies to agree on a one-year delay in Sony's investment in the factory. Sharp however continued construction of the factory to the original schedule.